As filed with the Securities and Exchange Commission on November 2, 2007

Registration No. 333-          

 

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

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FORM S-1

Registration Statement

Under

The Securities Act of 1933

 

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VeriSign, Inc.

(Exact name of Registrant as specified in its charter)

 

Delaware		7372		94-3221585
(State or other jurisdiction of incorporation or organization)		(Primary Standard Industrial Classification Code Number)		(I.R.S. Employer Identification Number)

VeriSign, Inc.

487 E. Middlefield Road

Mountain View, California 94043

(650) 961-7500

(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)

 

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William A. Roper, Jr.

President and Chief Executive Officer

VeriSign, Inc.

487 E. Middlefield Road

Mountain View, California 94043

(650) 961-7500

(Name, address, including zip code, and telephone number, including area code, of agent for service)

 

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Please send copies of all communications to:

 

Richard H. Goshorn, Esq. Senior Vice President, General Counsel VeriSign, Inc. 487 E. Middlefield Road Mountain View, California 94043 (650) 961-7500		Jeffrey R. Vetter, Esq. Fenwick & West LLP 801 California Street Mountain View, California 94041 (650) 988-8500

Approximate date of commencement of proposed sale to the public:    As soon as practicable after this registration statement becomes effective.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act, check the following box.  x

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

CALCULATION OF REGISTRATION FEE

 

 

Title of Each Class of Securities to be Registered		Amount to be Registered		Proposed Maximum Offering Price per Share (1)		Proposed Maximum Aggregate Offering Price		Amount of Registration Fee
3.25% Junior Subordinated Convertible Debentures due 2037		$1,250,000,000		100%		$1,250,000,000		$38,375
Common Stock, $0.001 par value		36,371,000 (2)		— (3)		— (3)		— (3)
Total								$38,375

(1)	Estimated solely to compute the amount of the registration fee under Rule 457 under the Securities Act of 1933.

(2)

Represents the number of shares of common stock that are currently issuable upon conversion of the 3.25% Junior Subordinated Convertible Debentures due 2037, calculated based on a conversion rate of 29.0968 shares per $1,000 principal amount of the debentures. Pursuant to Rule 416 under the Securities Act of 1933, the Registrant is also registering an indeterminable number of shares of common stock as may be issued from time to time upon conversion of the debentures and as a result of stock splits and stock dividends.

(3)	Under Rule 457(i) under the Securities Act of 1933, no registration fee is required for these shares because no additional consideration will be received upon conversion of the debentures.

 

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The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

 

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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. NEITHER WE NOR THE SELLING SECURITYHOLDERS MAY SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES, AND NEITHER WE NOR THE SELLING SECURITYHOLDERS ARE SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

SUBJECT TO COMPLETION DATED NOVEMBER 2, 2007

PROSPECTUS

$1,250,000,000

3.25% Junior Subordinated Convertible Debentures due 2037 and

36,371,000 Shares of Common Stock Issuable Upon Conversion of the Debentures

We originally issued 3.25% Junior Subordinated Convertible Debentures due 2037 in a private placement transaction in August 2007. This prospectus supplement and the accompanying prospectus will be used by selling securityholders to resell their debentures and the common stock issuable upon conversion of the debentures.

The debentures will bear ordinary interest at a rate of 3.25% per year until August 15, 2037, the maturity date. Interest on the debentures will be payable semi-annually in arrears on February 15 and August 15 of each year, beginning February 15, 2008. In addition to ordinary interest on the debentures, beginning with the semi-annual interest period commencing on August 15, 2014, contingent interest will accrue during any semi-annual interest period where the average trading price of a debenture for the 10 trading day period immediately preceding the first day of such semi-annual period is greater than or equal to $1,500 per $1,000 principal amount of the debentures or is less than or equal to a threshold that will initially be set at $500 per $1,000 principal amount of the debentures and that will increase over time. We will also pay contingent interest equal to any extraordinary cash dividend or distribution that our board of directors designates as payable to the holders of the debentures. In addition, so long as we are not in default in the payment of interest on the debentures, we may defer payment of interest on the debentures for a period not exceeding 10 consecutive semi-annual interest payment periods, during which time interest will continue to accrue on a compounded basis.

Holders may convert their debentures based on a conversion rate of 29.0968 shares of our common stock per $1,000 principal amount of debentures, equivalent to a conversion price of approximately $34.37 per share, subject to adjustment, at their option at any time prior to May 15, 2037, under the following circumstances: (1) during any fiscal quarter commencing after December 31, 2007, if the last reported sale price of our common stock for at least 20 trading days during the period of 30 consecutive trading days ending on the last trading day of the preceding fiscal quarter is greater than or equal to 130% of the applicable conversion price on the last trading day of such preceding fiscal quarter; (2) during the five business day period after any ten consecutive trading day period in which the trading price per $1,000 principal amount of debentures for each day of that 10 consecutive trading day period was less than 98% of the product of the last reported sale price of our common stock and the conversion rate on such day; (3) if we call any or all of the debentures for redemption, at any time prior to the close of business on the trading day immediately preceding the redemption date; or (4) upon the occurrence of specified corporate transactions described in this prospectus. On or after May 15, 2037, holders may convert their debentures at any time prior to the close of business on the business day immediately preceding the maturity date. The conversion rate will be subject to adjustment in some events but will not be adjusted for accrued interest. Upon conversion, we will satisfy our conversion obligation by delivering cash, shares of our common stock or any combination thereof, at our option. In addition, we will increase the conversion rate for holders who elect to convert debentures in connection with certain fundamental changes as described in this prospectus.

We may not redeem the debentures prior to August 15, 2017. On or after that date and prior to the maturity date, we may redeem all or part of the debentures for cash at 100% of the principal amount of the debentures to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date, if the last reported sale price of our common stock has been at least 150% of the conversion price then in effect for at least 20 trading days during any 30 consecutive trading day period prior to the date on which we provide notice of redemption.

If we undergo a fundamental change, holders may require us to repurchase all or a portion of their debentures at a price equal to 100% of the principal amount of the debentures to be purchased plus any accrued and unpaid interest up to, but excluding, the repurchase date. We will pay cash for all debentures so repurchased.

The debentures are our unsecured junior obligations subordinated in right of payment to our existing and future senior debt and effectively subordinated in right of payment to all indebtedness and other liabilities of our subsidiaries. As of June 30, 2007, we did not have any senior debt outstanding, and the aggregate amount of indebtedness and other liabilities of our subsidiaries was approximately $198.7 million, excluding deferred revenue, intercompany liabilities and liabilities of a type not required to be reflected on the balance sheet of such subsidiaries in accordance with generally accepted accounting principles.

Since their initial issuance, the debentures have been eligible for trading on the PORTAL Market of the National Association of Securities Dealers, Inc. However, debentures sold by means of this prospectus will no longer be eligible for trading on the PORTAL Market. We do not intend to list the debentures on any other automated quotation system or any securities exchange.

Our common stock is listed on The Nasdaq Global Select Market under the symbol “VRSN.” The last reported sale price of our common stock on The Nasdaq Global Select Market on November 1, 2007 was $32.26 per share.

See “ Risk Factors” beginning on page 6 for a discussion of certain risks that you should consider in connection with an investment in the debentures.

 

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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

 

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This prospectus is dated                      , 2007.

 

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TABLE OF CONTENTS

 

		Page
FORWARD-LOOKING STATEMENTS		i
SUMMARY		1
THE OFFERING		2
RISK FACTORS		6
RATIO OF EARNINGS TO FIXED CHARGES		31
USE OF PROCEEDS		31
DIVIDEND POLICY		31
PRICE RANGE OF COMMON STOCK		32
SELECTED CONSOLIDATED FINANCIAL DATA		33
MANAGEMENT		38
DESCRIPTION OF DEBENTURES		42
DESCRIPTION OF CAPITAL STOCK		74
MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS		77
PRINCIPAL STOCKHOLDERS		85
SELLING SECURITYHOLDERS		88
PLAN OF DISTRIBUTION		95
LEGAL MATTERS		98
EXPERTS		98
INFORMATION INCORPORATED BY REFERENCE		99
WHERE YOU CAN FIND MORE INFORMATION		100

 

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In making your investment decision, you should rely only on the information contained or incorporated by reference in this prospectus. We have not authorized anyone to provide you with different information. Neither we nor the selling securityholders are making an offer of these securities in any state where the offer is not permitted. You should not assume that the information contained in this prospectus or the documents incorporated by reference herein is accurate as of any date other than the date on the front of this prospectus or the date of such document, as the case may be.

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FORWARD-LOOKING STATEMENTS

This prospectus and the documents incorporated by reference herein contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements, other than statements of historical facts, included or incorporated herein regarding our strategy, future operations, financial position, future revenues, projected costs, prospects, plans and objectives are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “will,” “would,” and similar expressions or expressions of the negative of these terms. Such statements are only predictions and, accordingly, are subject to substantial risks, uncertainties and assumptions.

Actual events and results may differ materially from those in the forward-looking statements and are subject to risks and uncertainties, including, among others, the uncertainty of future revenue and profitability and operating results due to such factors as increasing competition and pricing pressure from competing services offered at prices below our prices and market acceptance of our existing services and the inability of VeriSign to successfully develop and market new services, the uncertainty of whether new services as provided by VeriSign will achieve market acceptance or result in any revenues and the uncertainty that VeriSign will be able to execute successfully on its restructuring program and the risks associated with acquired businesses not integrating successfully and unanticipated costs of such integration and management transition, and other risk factors contained in this prospectus under the heading “Risk Factors” and in our SEC filings, including our annual report on Form 10-K for the year ended December 31, 2006 and quarterly report on Form 10-Q for the quarter ended June 30, 2007.

Except as required by law, we undertake no obligation to publicly update or revise any forward-looking statements to reflect events or developments after the date of this prospectus.

 

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RISK FACTORS

Investing in the debentures and our common stock involves a high degree of risk. In addition, our business, operations and financial condition are subject to various risks. You should carefully consider the risks described below with all of the other information included in this prospectus before making an investment decision. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties not presently known to us or that our management currently deems immaterial also may impair our business operations. If any of the risks described below were to occur, our business, financial condition, operating results and cash flows could be materially adversely affected. In such an event, the trading price of the debentures and our common stock could decline and you could lose all or part of your investment.

Risks related to our business

Our operating results may fluctuate and our future revenues and profitability are uncertain.

Our operating results have varied in the past and may fluctuate significantly in the future as a result of a variety of factors, many of which are outside our control. These factors include the following:

 

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the long sales and implementation cycles for, and potentially large order sizes of, some of our security and communications services and the timing and execution of individual customer contracts;

 

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volume of domain name registrations and customer renewals in our naming services business;

 

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the mix of all our services sold during a period;

 

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our success in marketing and market acceptance of our services by our existing customers and by new customers;

 

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changes in marketing expenses related to promoting and distributing our services;

 

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customer renewal rates and turnover of customers of our services;

 

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continued development of our direct and indirect distribution channels for our security services and communications services, both in the United States and abroad;

 

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changes in the level of spending for information technology-related products and services by enterprise customers;

 

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our success in assimilating the operations, products, services and personnel of any acquired businesses;

 

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the timing and execution of individual customer contracts, particularly large contracts;

 

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the impact of price changes in our communications services and security services or our competitors’ products and services;

 

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the impact of Statement of Financial Accounting Standards No. 123R that requires us to record a charge to earnings for stock-based compensation; and

 

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general economic and market conditions as well as economic and market conditions specific to the telecommunications and Internet industries.

Our operating expenses may increase. If an increase in our expenses is not accompanied by a corresponding increase in our revenues, our operating results will suffer, particularly as revenues from some of our services are recognized ratably over the term of the service, rather than immediately when the customer pays for them, unlike our sales and marketing expenditures, which are expensed in full when incurred.

Due to all of the above factors, our revenues and operating results are difficult to forecast. Therefore, we believe that period-to-period comparisons of our operating results will not necessarily be meaningful, and you should not rely upon them as an indication of future performance. Also, operating results may fall below our

 

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expectations and the expectations of securities analysts or investors in one or more future periods. If this were to occur, the market price of our common stock would likely decline.

Our operating results may be adversely affected by the uncertain geopolitical environment and unfavorable economic and market conditions.

Adverse economic conditions worldwide have contributed to downturns in the telecommunications and technology industries in the past and could impact our business in the future, resulting in:

 

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reduced demand for our services as a result of a decrease in information technology and telecommunications spending by our customers;

 

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increased price competition for our products and services; and

 

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higher overhead costs as a percentage of revenues.

Recent political turmoil in many parts of the world, including terrorist and military actions, may continue to put pressure on global economic conditions. If the economic and market conditions in the United States and globally do not continue to improve, or if they deteriorate, we may experience material adverse impacts on our business, operating results and financial condition as a consequence of the above factors or otherwise.

Our limited operating history under our current business structure may result in significant fluctuations of our financial results.

We have acquired many companies, a number of which operated in different businesses from our then-current business. Therefore, we have only a limited operating history on which to base an evaluation of our consolidated business and prospects. Our success will depend on many factors, many of which are not entirely under our control, including, but not limited to, the following:

 

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the successful integration of acquired companies;

 

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the use of the Internet and other Internet Protocol (“IP”) networks for electronic commerce and communications;

 

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the extent to which digital certificates and domain names are used for electronic commerce or communications;

 

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growth in the number of websites;

 

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growth in wireless networks and communications;

 

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growth in demand for our services;

 

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the continued evolution of electronic and mobile commerce as a viable means of conducting business;

 

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the competition for any of our services;

 

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the perceived security of electronic commerce and communications over the Internet and other IP networks;

 

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the perceived security of our services, technology, infrastructure and practices;

 

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the significant lead times before a new product or service begins generating revenues;

 

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the varying rates at which telecommunications companies, telephony resellers and Internet service providers use our services;

 

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the success in marketing and overall demand for our content services to consumers and businesses;

 

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the loss of customers through industry consolidation or customer decisions to deploy in-house or competitor technology and services; and

 

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our continued ability to maintain our current, and enter into additional, strategic relationships.

 

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To address these risks we must, among other things:

 

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successfully market our services to new and existing customers;

 

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attract, integrate, train, retain and motivate qualified personnel;

 

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respond to competitive developments;

 

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successfully introduce new services; and

 

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successfully introduce enhancements to our services to address new technologies and standards and changing market conditions.

The internal review of our historical stock option granting practices, the restatement of certain of our historical consolidated financial statements, investigations by the SEC and related events have had, and will continue to have, an adverse effect on us.

An ad hoc group of our independent directors who had not served on the compensation committee of the board of directors before 2005 (the “Ad Hoc Group”) conducted a review of our historical stock option granting practices for the period January 1998 through May 2006. During the course of the review, the Ad Hoc Group identified stock option grants with incorrect measurement dates, without required documentation, or with initial grant dates and exercise prices that were subsequently modified. Consequently, we recorded additional non-cash stock-based compensation expense and related tax effects with regard to past stock option grants. In our annual report on Form 10-K for the year ended December 31, 2006 filed with the SEC on July 12, 2007, we restated our consolidated balance sheet as of December 31, 2005, and the related consolidated statements of income, stockholders’ equity, and cash flows for the years ended December 31, 2005 and 2004. In our Form 10-Q for the quarter ended March 31, 2007 filed with the SEC on July 16, 2007, we restated our unaudited quarterly financial information and financial statements for the three months ended March 31, 2006. Details of the restatement and its underlying circumstances are discussed in the Explanatory Note in Note 2 “Restatement of Consolidated Financial Statements” of the Notes to Consolidated Financial Statements in our annual report on Form 10-K for the year ended December 31, 2006.

As a result of the events described above, we have become subject to a number of significant risks, each of which could have an adverse effect on our business, financial condition and results of operations, including:

 

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we are subject to significant pending civil litigation, including stockholder class action lawsuits and derivative claims made on behalf of us, the defense of which will require us to devote significant management attention and to incur significant legal expense and which litigation, if decided against us, could require us to pay substantial judgments, settlements or other penalties;

 

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the formal order of investigation from the SEC, a grand jury subpoena from the U.S. Attorney for the Northern District of California, remedial efforts and related litigation have required and could require significant time and attention from many members of our senior management team and our board of directors and could cause us to incur significant accounting and legal expense and could require us to pay substantial fines or other penalties; and

 

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we are subject to the risk of additional litigation and regulatory proceedings or actions.

We have identified a material weakness in our internal controls over financial reporting that could cause investors to lose confidence in the reliability of our financial statements and result in a decrease in the value of our securities.

Our management has identified a material weakness in our internal control over financial reporting as of December 31, 2006 arising from a combination of internal control deficiencies in our stock administration policies and practices, as discussed Part I, Item 4, “Controls and Procedures” in our Form 10-Q for the quarter ended June 30, 2007. In addition, due to the identification of a material weakness in internal control over

 

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financial reporting, our chief executive officer and chief financial officer concluded that, as of December 31, 2006 and June 30, 2007, our disclosure controls and procedures were not effective.

We will continue to evaluate, upgrade and enhance our internal controls. Because of inherent limitations, our internal control over financial reporting may not prevent or detect misstatements, errors or omissions, and any projections of any evaluation of effectiveness of internal controls to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with our policies or procedures may deteriorate. We cannot be certain in future periods that other control deficiencies that may constitute one or more “significant deficiencies” (as defined by the relevant auditing standards) or material weaknesses in our internal control over financial reporting will not be identified. If we fail to correct the inadequacy of our internal controls, including any failure to implement or difficulty in implementing required new or improved controls, our business and results of operations could be harmed, the results of operations we report could be subject to adjustments, we may continue to be unable to provide reasonable assurance as to our financial results or the effectiveness of our internal controls or meet our reporting obligations and there could be a material adverse effect on the price of our securities.

We have expended significant resources in connection with the Section 404 of the Sarbanes-Oxley Act process. In future periods, we will likely continue to expend substantial amounts in connection with the Section 404 of the Sarbanes-Oxley Act process and with ongoing evaluation of, and improvements and enhancements to, our internal control over financial reporting. These expenditures may make it difficult for us to control or reduce the growth of our general and administrative and other expenses, which could adversely affect our results of operations and the price of our securities.

If our cost reduction and restructuring efforts are ineffective, our revenues and profitability may be hurt.

During 2007, we have undertaken various cost reduction and restructuring activities that replaced our previous business unit structure with a functional organization consisting of a combined worldwide sales and services team and an integrated marketing and product development organization. The restructuring, impairments and other charges, net, are approximately $42.2 million for the six months ended June 30, 2007; however, if we incur additional restructuring-related charges, our financial condition and results of operations may suffer. In addition, the cost reduction and restructuring activities may not produce the full efficiencies and benefits we expect or the efficiencies and benefits might be delayed. There can be no assurance that these efforts, as well as any potential future cost reduction and restructuring activities, will not adversely affect our business, operations or customer perceptions, or result in additional future charges. In addition, we have recently experienced changes in our management, which together with these cost reduction and restructuring activities, could also cause our remaining employees to leave or result in reduced productivity by our remaining employees, which in turn may affect our revenue and other operating results in the future.

We have faced difficulties assimilating, and may incur costs associated with, acquisitions and dispositions.

We made numerous acquisitions and dispositions in the last six years and expect to pursue additional acquisitions and dispositions in the future. We have experienced difficulty in, and in the future may face difficulties, integrating the personnel, products, technologies or operations of companies or businesses we acquire or divest. Assimilating acquired businesses and dispositions involves a number of other risks, including, but not limited to:

 

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the potential disruption of our ongoing business;

 

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the potential impairment of relationships with our employees, customers and strategic partners;

 

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the need to manage more geographically-dispersed operations, such as our offices in the states of Georgia, Kansas, Illinois, Massachusetts, New York, Rhode Island, Texas, Virginia, and Washington, and globally in Australia, Europe, India, Japan, South Africa and South America;

 

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greater than expected costs and/or lower than expected revenues and the assumption of unknown liabilities;

 

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the diversion of management’s attention from our other businesses in identifying, completing and integrating acquisitions;

 

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the inability to retain the key employees of the acquired businesses;

 

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adverse effects on the existing customer relationships of acquired companies;

 

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the inability to incorporate acquired technologies successfully into our operations infrastructure;

 

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the difficulty of assimilating the operations and personnel of the acquired businesses;

 

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the potential incompatibility of business cultures;

 

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additional regulatory requirements;

 

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any perceived adverse changes in business focus;

 

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entering into markets and acquiring technologies in areas in which we have little experience;

 

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the need to incur debt, which may reduce our cash available for operations and other uses, or issue equity securities, which may dilute the ownership interests of our existing stockholders; and

 

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the inability to maintain uniform standards, controls, procedures and policies.

If we are unable to successfully address any of these risks for future acquisitions and dispositions, our business could be harmed.

Additionally, there is risk that we may incur additional expenses associated with an impairment of a portion of goodwill and other intangible assets due to changes in market conditions for acquisitions and dispositions. Under generally accepted accounting principles, we are required to evaluate goodwill for impairment on an annual basis and to evaluate other intangible assets as events or circumstances indicate that such assets may be impaired. These evaluations could result in further impairments of goodwill or other intangible assets.

We may not realize the benefits we are seeking from our investments in the Jamba joint ventures as a result of lower than predicted operating results, larger funding requirements or lower cash distributions or otherwise.

We have a 49% equity interest in two joint ventures related to our former Jamba business. We will recognize our proportionate share of the income or losses of these joint ventures in our consolidated statements of operations. We do not have control over the budget, day-to-day management or many of the other operating expenditures of the joint ventures, and therefore, we cannot predict with certainty the extent of the impact on our financial statements of these joint ventures for any particular period. Accordingly, our share of the income or losses of these joint ventures could materially affect our results of operations in future periods.

The joint venture agreements contain provisions requiring minimum cash distributions to the members. However, these provisions are subject to conditions and limitations, and therefore, we cannot assure you that we will ever receive cash distributions from these joint ventures. If the joint ventures require capital to fund their operations, we could be required to make capital contributions or loans to the joint ventures. The business operated by the U.S. joint venture is a newer business and therefore it may be more likely to require additional funding, although we cannot assure that the Netherlands joint venture will not require additional funding as well. If the Netherlands joint venture makes cash distributions to its members, to the extent we seek to use the cash in the United States we would be required to pay taxes on those funds if they are brought to the United States, and therefore we would not receive the full benefit of any cash distribution. Additionally, we could be required to pay additional amounts to the joint ventures if it is later determined that we breached any of the representations of warranties in the formation agreement for the joint ventures.

 

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The value of our investment in these joint ventures is subject to general economic, technological and market trends, as well as to the operating and financial decisions of the management team of the joint venture, all of which are outside of our control. In addition, these joint ventures may not gain the expected number of customers and/or generate the expected level of revenues, and consequently, we may never receive any cash distributions from these joint ventures, and in fact, they may require additional funding, any of which could diminish the value of or dilute our investment. Our investments in these joint ventures may not provide the economic returns we are seeking and may not increase in value. Although we have the right under certain circumstances to sell our interest to Fox Entertainment Group, Inc. (“Fox”), a subsidiary of News Corporation, we cannot assure you that the value of our investment would ever exceed the amount that we can require Fox or News Corporation to buy our shares from us. We cannot assure you that the commercial agreements that are part of our arrangement with Fox will provide us any benefit. It is also possible that Fox and News Corporation could purchase our shares from us pursuant to the “call” provisions of the joint ventures in the future, prior to the businesses of the joint ventures reaching their full potential. Therefore, we cannot provide you with any assurance as to whether we will achieve a favorable return on our investment.

We also entered into various other commercial relationships with the joint ventures; however, we cannot assure you we will derive significant revenues from these other relationships.

The expansion of our international operations subjects our business to additional economic risks that could have an adverse impact on our revenues and business.

As of September 30, 2007, we had approximately 1,241 employees outside the United States, including Europe, Asia, Australia and the Americas. Expansion in these international markets has required and will continue to require significant management attention and resources. We may also need to tailor some of our other services for a particular market and to enter into international distribution and operating relationships. We have limited experience in localizing our services and in developing international distribution or operating relationships. We may not succeed in expanding our services into international markets. Failure to do so could harm our business. Moreover, local laws and customs in many countries differ significantly from those in the United States. In many foreign countries, particularly in those with developing economies, it is common for others to engage in business practices that are prohibited by our internal policies and procedures or United States regulations applicable to us. There can be no assurance that any of our employees, contractors and agents will not take actions in violations of them. Violations of laws or key control policies by our employees, contractors or agents could result in financial reporting problems, fines, penalties, or prohibition on the importation or exportation of our products and could have a material adverse effect on our business. In addition, there are risks inherent in doing business on an international basis, including, among others:

 

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competition with foreign companies or other domestic companies entering the foreign markets in which we operate;

 

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differing and uncertain regulatory requirements;

 

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legal uncertainty regarding liability and compliance with foreign laws;

 

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export and import restrictions on cryptographic technology and products incorporating that technology;

 

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tariffs and other trade barriers and restrictions;

 

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difficulties in staffing and managing foreign operations;

 

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longer sales and payment cycles;

 

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problems in collecting accounts receivable;

 

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currency fluctuations, as our international revenues from Europe, South Africa, Japan, South America and Australia are not denominated in U.S. Dollars;

 

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potential problems associated with adapting our services to technical conditions existing in different countries;

 

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the necessity of developing foreign language portals and products for our services;

 

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difficulty of authenticating customer information for digital certificates and other purposes;

 

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political instability;

 

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failure of foreign laws to protect our U.S. proprietary rights adequately;

 

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more stringent privacy policies in foreign countries;

 

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additional vulnerability from terrorist groups targeting U.S. interests abroad;

 

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seasonal reductions in business activity; and

 

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potentially adverse tax consequences.

Our failure to manage past and future growth in our business could harm our business.

Between December 31, 1995 and September 30, 2007, we grew from 26 to 4,373 employees. This was achieved through internal growth, as well as acquisitions. During this time period, we opened new sales offices and significantly expanded our U.S. and non-U.S. operations. To successfully manage past growth and any future growth, we will need to continue to implement additional management information systems, continue the development of our operating, administrative, financial and accounting systems and controls and maintain close coordination among our executive, engineering, accounting, finance, marketing, sales and operations organizations. Any failure to manage growth effectively could harm our business.

The business environment is highly competitive and, if we do not compete effectively, we may suffer price reductions, reduced gross margins and loss of market share.

Competition in Security Services. Our security services are targeted at the rapidly evolving market for Internet security services, including network security, authentication and validation, which enable secure electronic commerce and communications over wireline and wireless IP networks. The market for security services is intensely competitive, subject to rapid change and significantly affected by new product and service introductions and other market activities of industry participants.

Principal competitors generally fall within one of the following categories: (1) companies such as RSA Security, Inc. and Entrust Technologies, which offer software applications and related digital certificate products that customers operate themselves; (2) companies such as Digital Signature Trust Company (a subsidiary of Identrus) that primarily offer digital certificate and certification authority related services; (3) companies focused on providing a bundled offering of products and services; and (4) companies offering competing secure socket layer (“SSL”) certificate and other security services, including GoDaddy and other domain name registrars. We also experience competition from a number of smaller companies, and we believe that our primary long-term competitors may not yet have entered the market. Furthermore, Netscape and Microsoft have introduced software products that enable the issuance and management of digital certificates, and we believe that other companies could introduce similar products.

In addition, browser companies that embed our interface technologies or otherwise feature them as a provider of digital certificate products and services in their web browsers or on their websites could also promote our competitors or charge us substantial fees for promotions in the future.

Competition in Managed Security Services. Consulting companies or professional services groups of other companies with Internet expertise are current or potential competitors to our managed security services. These companies include large systems integrators and consulting firms, such as Accenture, IBM Global Services, Getronics and Lucent NetCare. We also compete with security product companies that offer managed security services in addition to other security services, such as Symantec and ISS, as well as a number of providers such

 

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as BT Counterpane that offer managed security services. Telecommunications providers, such as Verizon Business, a provider of managed security services, are also potential competitors. In addition, we compete with some companies that have developed products that automate the management of IP addresses and name maps throughout enterprise-wide intranets, and with companies with internally developed systems integration efforts.

Competition in Communications Services. The market for communications services is extremely competitive and subject to significant pricing pressure. Competition in this area arises from two primary sources. Incumbent carriers provide competing in-house services in their respective regions. In addition, we face direct competition from national, unregulated companies, including Syniverse Technologies, Telcordia, NeuStar and other carriers such as Southern New England Telephone Diversified Group, a unit of AT&T. Furthermore, customers are increasingly likely to deploy internally developed communications technologies and services which may reduce the demand for technologies and services from third-party providers, such as VeriSign, and further increase competitive pricing pressures.

Competition in Commerce Services. Our wireless billing and payment services are also subject to competition from providers such as Comverse, Amdocs, Convergys Corporation and Boston Communications Group. We are also aware of major Internet service providers, software developers and smaller entrepreneurial companies that are or may in the future be focusing significant resources on developing and marketing products and services that may compete directly with ours. Furthermore, customers are increasingly likely to deploy internally developed communications technologies and services which may reduce the demand for technologies and services from third-party providers such as VeriSign and further increase competitive pricing pressures.

Competition in Content Services. The market for content services is extremely competitive. Competitors include developers of content and entertainment products and services in a variety of domestic and international markets, such as Infospace, Itouch, Arvato mobile, Monstermob, and Motricity. This business also faces competition from mobile network operators such as Cingular, Verizon Wireless, Sprint Nextel Corporation, T-Mobile, Vodafone, O₂, Orange, E-Plus and Telefónica, as well as Internet portal operators such as Yahoo!, AOL, T-Online and Google. Additional competitors are handset manufacturers such as Nokia and software providers such as Microsoft and Apple. As the market for wireless data, including information and entertainment data, matures, new categories of competitors, such as mobile phone companies, broadcasters, music publishers, other content providers or others have begun to develop competing products or services.

Competition in Naming Services. We face competition in the domain name registry space from other generic top level domain (“gTLD”) and country code top level domain (“ccTLD”) registries that are competing for the business of entities and individuals that are seeking to establish a web presence, including registries offering services related to the .mobi, .biz, .name, .pro, .aero, .museum and .coop gTLDs and registries offering services related to ccTLDs. There are currently 16 gTLD registries and over 240 ccTLD registries.

We also face competition from service providers that offer outsourced domain name registration, resolutions and other Domain Name System services to organizations that require a reliable and scalable infrastructure. Among the competitors are UltraDNS, NeuLevel, Afilias, Register.com and Tucows.com.

Competition in Intelligent Supply Chain Services. There are a number of companies that provide intelligent supply chain services. For point-of-sale data, we face competition from IRI and AC Nielsen, as well as smaller software companies. For consulting services, we face competition from traditional consulting firms.

Competition in Real-Time Publisher Services. We face competition from various smaller companies providing similar services.

Competition in Digital Brand Management Services. We face competition from companies providing services similar to some of our Digital Brand Management Services. In the monitoring services, registration and domain name asset management area of our business, our competition comes primarily from Internet Corporation

 

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for Assigned Names and Numbers (“ICANN”) accredited registrars and various smaller companies providing similar services.

Several of our current and potential competitors have longer operating histories and significantly greater financial, technical, marketing and other resources than we do and therefore may be able to respond more quickly than we can to new or changing opportunities, technologies, standards and customer requirements. Many of these competitors also have broader and more established distribution channels that may be used to deliver competing products or services directly to customers through bundling or other means. If such competitors were to bundle competing products or services for their customers, the demand for our products and services might be substantially reduced and the ability to distribute our products successfully and the utilization of our services would be substantially diminished. New technologies and the expansion of existing technologies may increase the competitive pressure.

New technologies and the expansion of existing technologies may increase competitive pressure. We cannot assure you that competing technologies developed by others or the emergence of new industry standards will not adversely affect our competitive position or render our security services or technologies noncompetitive or obsolete. In addition, our markets are characterized by announcements of collaborative relationships involving our competitors. The existence or announcement of any such relationships could adversely affect our ability to attract and retain customers. As a result of the foregoing and other factors, we may not be able to compete effectively with current or future competitors, and competitive pressures that we face could materially harm our business.

Our communications services business depends in part on the acceptance of our SS7 network and the telecommunications industry’s continuing use of SS7 technology.

Our future growth in our communications services business depends, in part, on the commercial success and reliability of our SS7 network. Our SS7 network is a vital component of our intelligent network services and has been a significant source of revenues for our Communications Services Group. Our communications services business will suffer if our target customers do not use our SS7 network. Our future financial performance will also depend on the successful development, introduction and customer acceptance of new and enhanced SS7-based services. We are not certain that our target customers will choose our particular SS7 network solution or continue to use our SS7 network. In the future, we may not be successful in marketing our SS7 network or any new or enhanced services.

The inability of our customers to successfully implement our signaling and network services with their existing systems could adversely affect our business.

Significant technical challenges exist in our signaling and network services business because many of our customers:

 

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purchase and implement SS7 network services in phases;

 

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deploy SS7 connectivity across a variety of telecommunication switches and routes; and

 

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integrate our SS7 network with a number of legacy systems, third-party software applications and engineering tools.

Customer implementation currently requires participation by our order management and our engineering and operations groups, each of which has limited resources. Some customers may also require us to develop costly customized features or capabilities, which increases our costs and consumes a disproportionate share of our limited customer service and support resources. Also, we typically charge one-time fees for initially connecting a customer to our SS7 network and a monthly recurring flat rate fee after the connection is established. If new or existing customers have difficulty deploying our products or require significant amounts of

 

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our engineering service support, we may experience reduced operating margins. Our customers’ ability to deploy our network services to their own customers and integrate them successfully within their systems depends on our customers’ capabilities and the complexity involved. Difficulty in deploying those services could reduce our operating margins due to increased customer support and could cause potential delays in recognizing revenues until the services are implemented.

Our failure to achieve or sustain market acceptance of our communications services at desired pricing levels and industry consolidation could adversely impact our revenues and cash flow.

The telecommunications industry is characterized by significant price competition. Competition and industry consolidation in our communications services could result in significant pricing pressure and an erosion in our market share. Pricing pressure from competition could cause large reductions in the selling price of our services. For example, our competitors may provide customers with reduced communications costs for Internet access or private network services, reducing the overall cost of services and significantly increasing pricing pressures on us. We would need to offset the effects of any price reductions by increasing the number of our customers, generating higher revenues from enhanced services or reducing our costs, and we may not be able to do so successfully. We believe that the business of providing network connectivity and related network services will see increased consolidation in the future. Consolidation could decrease selling prices and increase competition in these industries, which could erode our market share, revenues and operating margins in our Communications Services Group. Consolidation in the telecommunications industry has led to the merging of many companies, including Nextel and Price Communications, customers of our Communications Services Group. Our business could be harmed if these mergers result in the loss of customers by our Communications Services Group. Furthermore, customers may choose to deploy internally developed communications technologies and services thereby reducing the demand for technologies and services we offer which could harm our business.

Our content services business depends on agreements with many different third parties, including wireless carrier and content providers. If these agreements are terminated or not renewed, or are amended to require us to change the way our content services are offered to customers, our business could be harmed.

Our content services business depends on our ability to enter into and maintain agreements with many different third parties including wireless carriers and other mobile phone service providers, upon which this business is highly dependent for billing its customers.

These agreements are typically for a short term, or are otherwise terminable upon short notice, and in the case of agreements with carriers, other mobile phone service providers and content developers, are non-exclusive. If these third parties reduce their commitment to us, terminate their agreements with us or enter into similar agreements with our competitors, our content services business could be materially harmed.

Our business depends on the continued growth of the Internet and adoption and continued use of IP networks.

Our future success depends, in part, on continued growth in the use of the Internet and IP networks. If the use of, and interest in, the Internet and IP networks does not grow, our business would be harmed. To date, many businesses and consumers have been deterred from utilizing the Internet and IP networks for a number of reasons, including, but not limited to:

 

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potentially inadequate development of network infrastructure;

 

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security concerns, particularly for online commerce, including the potential for merchant or user impersonation and fraud or theft of stored data and information communicated over IP networks;

 

•

privacy concerns, including the potential for third parties to obtain personally identifiable information about users or to disclose or sell data without notice to or the consent of such users;

 

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•

other security concerns such as attacks on popular websites by “hackers”;

 

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inconsistent quality of service;

 

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inability to integrate business applications on IP networks;

 

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the need to operate with multiple and frequently incompatible products;

 

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limited bandwidth access; and

 

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government regulation.

The widespread acceptance of the Internet and IP networks will require a broad acceptance of new methods of conducting business and exchanging information. Organizations that already have invested substantial resources in other methods of conducting business may be reluctant to adopt new methods. Also, individuals with established patterns of purchasing goods and services and effecting payments may be reluctant to change.

A number of states, as well as the U.S. Congress, have been considering various initiatives that could permit sales and use taxes on Internet sales. If any of these initiatives are adopted, it could substantially impair the growth of electronic commerce and therefore hinder the growth in the use of the Internet and IP networks, which could harm our business.

Many of our target markets are evolving, and if these markets fail to develop or if our products and services are not widely accepted in these markets, our business could suffer.

We target our security services at the market for trusted and secure electronic commerce and communications over IP and other networks. Our Information Services business unit is developing managed services designed to work with the EPCglobal Network and radio frequency identification (“RFID”), technology, point-of-sale data services and real-time publisher services. These are rapidly evolving markets that may not continue to grow. Even if these markets grow, our services may not be widely accepted. Accordingly, the demand for our services is very uncertain. The factors that may affect market acceptance of our services include the following:

 

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market acceptance of products and services based upon technologies other than those we use;

 

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public perception of the security of our technologies and of IP and other networks;

 

 

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the introduction and consumer acceptance of new generations of mobile handsets;

 

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demand for supply chain information services, including acceptance of RFID technology, the EPCglobal Network and point-of-sale data services;

 

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the ability of the Internet infrastructure to accommodate increased levels of usage; and

 

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government regulations affecting electronic commerce and communications over IP networks.

If the market for electronic commerce and communications over IP and other networks does not grow or these services are not widely accepted in the market, our business would be materially harmed.

Governmental regulation and the application of existing laws may slow business growth, increase our costs of doing business and create potential liability.

The growth and development of the Internet has led to new laws and regulations, as well as the application of existing laws to the Internet and wireless communications. Application of these laws can be unclear. The costs of complying or failure to comply with these laws and regulations could limit our ability to operate in our markets, expose us to compliance costs and substantial liability and result in costly and time-consuming litigation.

 

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Foreign, federal or state laws could have an adverse impact on our business. For example, recent laws include those designed to restrict the on-line distribution of certain materials deemed harmful to children and impose additional restrictions or obligations for on-line services when dealing with minors. Such legislation may impose significant additional costs on our business or subject us to additional liabilities.

Due to the nature of the Internet, it is possible that the governments of other states and foreign countries might attempt to regulate Internet transmissions or prosecute us for violations of their laws. We might unintentionally violate such laws, such laws may be modified and new laws may be enacted in the future. Any such developments could increase the costs of regulatory compliance for us, force us to change our business practices or otherwise materially harm our business.

Our inability to react to changes in our industry and successfully introduce new products and services could harm our business.

The emerging nature of the Internet, other communication networks, content, digital certificate, and domain name registration markets, and their rapid evolution, require us continually to improve the performance, features and reliability of our services, particularly in response to competitive offerings. In particular, the market for entertainment and information is characterized by changing technology, developing industry standards, changing customer preferences and trends (which also vary from country to country), and the constant introduction of new products and services. In order to remain competitive, we must continually improve our access technology and software, support the latest transmission technologies, and adapt our products and services to changing market conditions and customer preferences. When entertainment products are placed on the market, it is difficult to predict whether they will become popular.

The communications network services industry is also characterized by rapid technological change and frequent new product and service announcements. Significant technological changes could make our technologies obsolete and other changes in our markets could result in some of our other products and services losing market share. Accordingly, we must continually improve the responsiveness, reliability and features of our services and develop new features, services and applications to meet changing customer needs in our target markets. For example, we sell our SS7 network services primarily to traditional telecommunications companies that rely on traditional voice networks. Many emerging companies are providing convergent Internet protocol-based network services. Our future success could also depend upon our ability to provide products and services to these Internet protocol-based telephony providers, particularly if IP-based telephony becomes widely accepted. We cannot assure that we will be able to adapt to these challenges or respond successfully or in a cost-effective way to adequately meet them. Our failure to do so would adversely affect our ability to compete and retain customers or market share.

New products and services developed or introduced by us may not result in any significant revenues.

We must commit significant resources to develop new products and services before knowing whether our investments will result in products and services the market will accept. The success of new products and services depends on several factors, including proper new definition and timely completion, introduction and market acceptance. For example, our selection in January 2004 by EPCglobal, a not-for-profit standards organization, to operate the Object Naming Service as the root directory for the EPCglobal Network, may not increase our revenues in the foreseeable future. There can be no assurance that we will successfully identify new product and service opportunities, develop and bring new products and services to market in a timely manner, or achieve market acceptance of our products and services, or that products, services and technologies developed by others will not render our products, services or technologies obsolete or noncompetitive. Our inability to successfully market new products and services may harm our business.

 

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Issues arising from our agreements with ICANN and the Department of Commerce could harm our registry business.

The U.S. Department of Commerce (“DOC”) has adopted a plan for the phased transition of the DOC’s responsibilities for the domain name system to the ICANN. As part of this transition, as the exclusive registry of domain names within the .com and .net gTLDs, we have entered into agreements with ICANN and with the DOC.

We face risks from the transition of the DOC’s responsibilities for the domain name system to ICANN, including the following:

 

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ICANN could adopt or promote policies, procedures or programs that are unfavorable to us as the registry operator of the .com and .net gTLDs or that are inconsistent with our current or future plans;

 

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the DOC or ICANN could terminate our agreements to be the registry for the .com or .net gTLDs under the circumstances described elsewhere in this report;

 

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if the .com and .net Registry Agreements are terminated, it could have a material adverse impact on our business;

 

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the DOC’s or ICANN’s interpretation of provisions of our agreements with either of them could differ from ours;

 

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the DOC could revoke its recognition of ICANN, as a result of which the DOC could take the place of ICANN for purposes of our agreements with ICANN, and could take actions that are harmful to us;

 

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the U.S. Government could refuse to transfer certain responsibilities for domain name system administration to ICANN due to security, stability or other reasons, resulting in fragmentation or other instability in domain name system administration; and

 

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our registry business could face legal or other challenges resulting from our activities or the activities of registrars.

Challenges to ongoing privatization of Internet administration could harm our domain name registry business.

Risks we face from challenges by third parties, including governmental authorities in the United States and other countries, to our role in the ongoing privatization of the Internet include:

 

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legal, regulatory or other challenges could be brought, including challenges to the agreements governing our relationship with the DOC or ICANN, or to the legal authority underlying the roles and actions of the DOC, ICANN or us;

 

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the U.S. Congress could take action that is unfavorable to us;

 

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ICANN could fail to maintain its role, potentially resulting in instability in domain name system administration; and

 

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some governments and governmental authorities outside the United States have in the past disagreed with, and may in the future disagree with, the actions, policies or programs of ICANN, the U.S. Government and us relating to the domain name system. These foreign governments or governmental authorities may take actions or adopt policies or programs that are harmful to our business.

As a result of these and other risks, it may be difficult for us to introduce new services in our domain name registry business and we could also be subject to additional restrictions on how this business is conducted.

 

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If we encounter system interruptions, we could be exposed to liability and our reputation and business could suffer.

We depend on the uninterrupted operation of our various systems, secure data centers and other computer and communication networks. Our systems and operations are vulnerable to damage or interruption from:

 

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power loss, transmission cable cuts and other telecommunications failures;

 

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damage or interruption caused by fire, earthquake, and other natural disasters;

 

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computer viruses or software defects; and

 

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physical or electronic break-ins, sabotage, intentional acts of vandalism, terrorist attacks and other events beyond our control.

Most of our systems are located at, and most of our customer information is stored in, our facilities in Mountain View, California and Kawasaki, Japan, both of which are susceptible to earthquakes; Providence, Rhode Island; Dulles, Virginia; Lacey, Washington; Overland Park, Kansas; Melbourne, Australia; and Berlin, Hamburg and Verl, Germany. Any damage or failure that causes interruptions in any of these facilities or our other computer and communications systems could materially harm our business. Although we carry insurance for property damage and business interruption, we do not carry insurance or financial reserves for interruptions or potential losses arising from earthquakes or terrorism.

In addition, our ability to issue digital certificates, our domain name registry services and other of our services depend on the efficient operation of the Internet connections from customers to our secure data centers and from our customers to the shared registration system. These connections depend upon the efficient operation of Internet service providers and Internet backbone service providers, all of which have had periodic operational problems or experienced outages in the past.

A failure in the operation of our domain name zone servers, the domain name root servers, or other events could result in the deletion of one or more domain names from the Internet for a period of time. A failure in the operation of our shared registration system could result in the inability of one or more other registrars to register and maintain domain names for a period of time. A failure in the operation or update of the master database that we maintain could result in the deletion of one or more top-level domains from the Internet and the discontinuation of second-level domain names in those top-level domains for a period of time. Any of these problems or outages could decrease customer satisfaction, which could harm our business.

If we experience security breaches, we could be exposed to liability and our reputation and business could suffer.

We retain certain confidential customer information in our secure data centers and various registration systems. It is critical to our business strategy that our facilities and infrastructure remain secure and are perceived by the marketplace to be secure. Our domain name registry operations also depend on our ability to maintain our computer and telecommunications equipment in effective working order and to reasonably protect our systems against interruption, and potentially depend on protection by other registrars in the shared registration system. The root zone servers and top-level domain name zone servers that we operate are critical hardware to our registry services operations. Therefore, we may have to expend significant time and money to maintain or increase the security of our facilities and infrastructure.

Despite our security measures, our infrastructure may be vulnerable to physical break-ins, computer viruses, attacks by hackers or similar disruptive problems. It is possible that we may have to expend additional financial and other resources to address such problems. Any physical or electronic break-in or other security breach or compromise of the information stored at our secure data centers and domain name registration systems may jeopardize the security of information stored on our premises or in the computer systems and networks of our

 

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customers. In such an event, we could face significant liability and customers could be reluctant to use our services. Such an occurrence could also result in adverse publicity and therefore adversely affect the market’s perception of the security of electronic commerce and communications over IP networks as well as of the security or reliability of our services.

The reliance of our network connectivity and interoperability services and content services on third-party communications infrastructure, hardware and software exposes us to a variety of risks we cannot control.

The success of our network connectivity and interoperability services and content services depends on our network infrastructure, including the capacity leased from telecommunications suppliers. In particular, we rely on AT&T, Sprint and other telecommunications providers for leased long-haul and local loop transmission capacity. These companies provide the dedicated links that connect our network components to each other and to our customers. Our business also depends upon the capacity, reliability and security of the infrastructure owned by third parties that is used to connect telephone calls. Specifically, we currently lease capacity from regional providers on four of the fourteen mated pairs of SS7 signal transfer points that comprise our network.

We have no control over the operation, quality or maintenance of a significant portion of that infrastructure or whether or not those third parties will upgrade or improve their equipment. We depend on these companies to maintain the operational integrity of our connections. If one or more of these companies is unable or unwilling to supply or expand its levels of service to us in the future, our operations could be severely interrupted. In addition, rapid changes in the telecommunications industry have led to the merging of many companies. These mergers may cause the availability, pricing and quality of the services we use to vary and could cause the length of time it takes to deliver the services that we use to increase significantly.

Our signaling and SS7 services rely on links, equipment and software provided to us from our vendors, the most important of which are gateway equipment and software from Tekelec and Agilent Technologies, Inc. We cannot assure you that we will be able to continue to purchase equipment from these vendors on acceptable terms, if at all. If we are unable to maintain current purchasing terms or ensure product availability with these vendors, we may lose customers and experience an increase in costs in seeking alternative suppliers of products and services.

Capacity limits on our technology and network hardware and software may be difficult to project and we may not be able to expand and upgrade our systems to meet increased use.

If traffic from our telecommunication and content customers through our network increases, we will need to expand and upgrade our technology and network hardware and software. We may not be able to expand and upgrade, in a timely manner, our systems and network hardware and software capabilities to accommodate increased traffic on our network. If we do not appropriately expand and upgrade our systems and network hardware and software, we may lose customers and revenues.

We rely on third parties who maintain and control root zone servers and route Internet communications.

We currently administer and operate only two of the thirteen root zone servers. The others are administered and operated by independent operators on a volunteer basis. Because of the importance to the functioning of the Internet of these root zone servers, our registry services business could be harmed if these volunteer operators fail to maintain these servers properly or abandon these servers, which would place additional capacity demands on the two root zone servers we operate.

Further, our registry services business could be harmed if any of these volunteer operators fail to include or provide accessibility to the data that it maintains in the root zone servers that it controls. In the event and to the extent that ICANN is authorized to set policy with regard to an authoritative root server system, as provided in our registry agreement with ICANN, it is required to ensure that the authoritative root will point to the top-level domain zone servers designated by us. If ICANN does not do this, our business could be harmed.

 

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Undetected or unknown defects in our services could harm our business and future operating results.

Services as complex as those we offer or develop frequently contain undetected defects or errors. Despite testing, defects or errors may occur in our existing or new services, which could result in loss of or delay in revenues, loss of market share, failure to achieve market acceptance, diversion of development resources, injury to our reputation, tort or warranty claims, increased insurance costs or increased service and warranty costs, any of which could harm our business. The performance of our services could have unforeseen or unknown adverse effects on the networks over which they are delivered as well as on third-party applications and services that utilize our services, which could result in legal claims against us, harming our business. Furthermore, we often provide implementation, customization, consulting and other technical services in connection with the implementation and ongoing maintenance of our services, which typically involves working with sophisticated software, computing and communications systems. Our failure or inability to meet customer expectations in a timely manner could also result in loss of or delay in revenues, loss of market share, failure to achieve market acceptance, injury to our reputation and increased costs.

Services offered by our Internet Services Group rely on public key cryptography technology that may compromise our system’s security.

Services offered by our Internet Services Group depend on public key cryptography technology. With public key cryptography technology, a user is given a public key and a private key, both of which are required to perform encryption and decryption operations. The security afforded by this technology depends on the integrity of a user’s private key and that it is not lost, stolen or otherwise compromised. The integrity of private keys also depends in part on the application of specific mathematical principles known as “factoring.” This integrity is predicated on the assumption that the factoring of large numbers into their prime number components is difficult. Should an easy factoring method be developed, the security of encryption products utilizing public key cryptography technology would be reduced or eliminated. Furthermore, any significant advance in techniques for attacking cryptographic systems could also render some or all of our existing PKI services obsolete or unmarketable. If improved techniques for attacking cryptographic systems were ever developed, we would likely have to reissue digital certificates to some or all of our customers, which could damage our reputation and brand or otherwise harm our business. In the past there have been public announcements of the successful attack upon cryptographic keys of certain kinds and lengths and of the potential misappropriation of private keys and other activation data. This type of publicity could also hurt the public perception as to the safety of the public key cryptography technology included in our digital certificates. This negative public perception could harm our business.

Some of our security services have lengthy sales and implementation cycles.

We market many of our security services directly to large companies and government agencies and we market our communications services to large telecommunication carriers. The sale and implementation of our services to these entities typically involves a lengthy education process and a significant technical evaluation and commitment of capital and other resources. This process is also subject to the risk of delays associated with customers’ internal budgeting and other procedures for approving large capital expenditures, deploying new technologies within their networks and testing and accepting new technologies that affect key operations. As a result, the sales and implementation cycles associated with certain of our services can be lengthy, potentially lasting from three to nine months. Our quarterly and annual operating results could be materially harmed if orders forecasted for a specific customer for a particular quarter are not realized.

Failure of VeriSign Affiliates to follow our security and trust practices or to maintain the privacy or security of confidential customer information could have an adverse impact on our revenues and business.

We have licensed to VeriSign Affiliates our Processing Center platform, which is designed to replicate our own secure data centers and allows the VeriSign Affiliate to offer back-end processing of PKI services for enterprises. The VeriSign Processing Center platform provides a VeriSign Affiliate with the knowledge and

 

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technology to offer PKI services similar to those offered by us. It is critical to our business strategy that the facilities and infrastructure used in issuing and marketing digital certificates remain secure and we are perceived by the marketplace to be secure. Although we provide the VeriSign Affiliate with training in security and trust practices, network management and customer service and support, these practices are performed by the affiliate and are outside of our control. Any failure of a VeriSign Affiliate to maintain the privacy or security of confidential customer information could result in negative publicity and therefore adversely affect the market’s perception of the security of our services as well as the security of electronic commerce and communication over IP networks generally.

We rely on our intellectual property, and any failure by us to protect, or any misappropriation of, our intellectual property could harm our business.

Our success depends on our internally developed technologies, patents and other intellectual property. Despite our precautions, it may be possible for a third party to copy or otherwise obtain and use our trade secrets or other forms of our intellectual property without authorization. Furthermore, the laws of foreign countries may not protect our proprietary rights in those countries to the same extent U.S. law protects these rights in the United States. In addition, it is possible that others may independently develop substantially equivalent intellectual property. If we do not effectively protect our intellectual property, our business could suffer. In the future, we may have to resort to litigation to enforce our intellectual property rights, to protect our trade secrets or to determine the validity and scope of the proprietary rights of others. This type of litigation, regardless of its outcome, could result in substantial costs and diversion of management and technical resources.

We also license third-party technology that is used in our products and services to perform key functions. These third-party technology licenses may not continue to be available to us on commercially reasonable terms or at all. Our business could suffer if we lost the rights to use these technologies. A third party could claim that the licensed software infringes a patent or other proprietary right. Litigation between the licensor and a third party or between us and a third-party could lead to royalty obligations for which we are not indemnified or for which indemnification is insufficient, or we may not be able to obtain any additional license on commercially reasonable terms or at all. The loss of, or our inability to obtain or maintain, any of these technology licenses could delay the introduction of our Internet infrastructure services until equivalent technology, if available, is identified, licensed and integrated. This could harm our business.

We could become subject to claims of infringement of intellectual property of others, which could be costly to defend and which could harm our business.

Claims relating to infringement of intellectual property of others or other similar claims have been made against us in the past and could be made against us in the future. In addition, we use news content as part of our real-time publisher service. It is possible that we could become subject to additional claims for infringement of the intellectual property of third parties. Any claims, with or without merit, could be time-consuming, result in costly litigation and diversion of technical and management personnel, cause delays or require us to develop non-infringing technology or enter into royalty or licensing agreements. Royalty or licensing agreements, if required, may not be available on acceptable terms or at all. If a successful claim of infringement were made against us, we could be required to pay damages or have portions of our business enjoined. If we could not develop non-infringing technology or license the infringed or similar technology on a timely and cost-effective basis, our business could be harmed.

In addition, legal standards relating to the validity, enforceability, and scope of protection of intellectual property rights in Internet-related businesses are uncertain and still evolving. Because of the growth of the Internet and Internet-related businesses, patent applications are continuously and simultaneously being filed in connection with Internet-related technology. There are a significant number of U.S. and foreign patents and patent applications in our areas of interest, and we believe that there has been, and is likely to continue to be, significant litigation in the industry regarding patent and other intellectual property rights.

 

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We must establish and maintain strategic and other relationships.

One of our significant business strategies has been to enter into strategic or other similar collaborative relationships in order to reach a larger customer base than we could reach through our direct sales and marketing efforts. We may need to enter into additional relationships to execute our business plan. We may not be able to enter into additional, or maintain our existing, strategic relationships on commercially reasonable terms. If we fail to enter into additional relationships, we would have to devote substantially more resources to the distribution, sale and marketing of our security services and communications services than we would otherwise.

Our success in obtaining results from these relationships will depend both on the ultimate success of the other parties to these relationships and on the ability of these parties to market our services successfully.

Furthermore, our ability to achieve future growth will also depend on our ability to continue to establish direct seller channels and to develop multiple distribution channels. Failure of one or more of our strategic relationships to result in the development and maintenance of a market for our services could harm our business. If we are unable to maintain our relationships or to enter into additional relationships, this could harm our business.

We depend on key personnel to manage our business effectively and may not be successful in attracting and retaining such personnel.

We depend on the performance of our senior management team and other key employees. Our success also depends on our ability to attract, integrate, train, retain and motivate these individuals and additional highly skilled technical and sales and marketing personnel, both in the United States and abroad. In addition, our stringent hiring practices for some of our key personnel, which consist of background checks into prospective employees’ criminal and financial histories, further limit the number of qualified persons for these positions.

We have no employment agreements with any of our key executives that prevent them from leaving VeriSign at any time. In addition, we do not maintain key person life insurance for any of our officers or key employees. The loss of the services of any of our senior management team or other key employees or failure to attract, integrate, train, retain and motivate additional key employees could harm our business.

Compliance with rules and regulations concerning corporate governance is costly and could harm our business.

The Sarbanes-Oxley Act mandates, among other things, that companies adopt corporate governance measures and imposes comprehensive reporting and disclosure requirements, sets stricter independence and financial expertise standards for audit committee members and imposes increased civil and criminal penalties for companies, their chief executive officers and chief financial officers and directors for securities law violations. For example, Section 404 of the Sarbanes-Oxley Act requires companies to do a comprehensive and costly evaluation of their internal controls. In addition, The Nasdaq Stock Market has adopted additional comprehensive rules and regulations relating to corporate governance. These laws, rules and regulations have increased the scope, complexity and cost of our corporate governance, reporting and disclosure practices, and our compliance efforts have required significant management attention. It has become more difficult and more expensive for us to obtain director and officer liability insurance, and we have been required to accept reduced coverage and incur substantially higher costs to obtain the reduced level of coverage. Further, our board members, chief executive officer and chief financial officer face an increased risk of personal liability in connection with the performance of their duties. As a result, we may have difficulty attracting and retaining qualified board members and executive officers, which could harm our business.

 

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We have anti-takeover protections that may delay or prevent a change in control that could benefit our stockholders.

Our amended and restated certificate of incorporation and bylaws contain provisions that could make it more difficult for a third party to acquire us without the consent of our board of directors. These provisions include:

 

•

our stockholders may take action only at a meeting and not by written consent;

 

•

our board must be given advance notice regarding stockholder-sponsored proposals for consideration at annual meetings and for stockholder nominations for the election of directors;

 

•

vacancies on our board may be filled until the next annual meeting of stockholders only by majority vote of the directors then in office; and

 

•

special meetings of our stockholders may be called only by the chairman of the board, the chief executive officer, the president or the board, and not by our stockholders.

We have also adopted a stockholder rights plan that may discourage, delay or prevent a change of control and make any future unsolicited acquisition attempt more difficult. Under the rights plan:

 

•

the rights will become exercisable only upon the occurrence of certain events specified in the plan, including the acquisition of 20% of our outstanding common stock by a person or group;

 

•

each right entitles the holder, other than an “acquiring person,” to acquire shares of our common stock at a 50% discount to the then-prevailing market price; and

 

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Our board of directors may redeem outstanding rights at any time prior to a person becoming an “acquiring person,” at a price of $0.001 per right. Prior to such time, the terms of the rights may be amended by our board of directors without the approval of the holders of the rights.

Changes in, or interpretations of, tax rules and regulations may adversely affect our effective tax rates.

We are subject to income taxes in both the United States and numerous foreign jurisdictions. Significant judgment is required in determining our worldwide provision for income taxes. In the ordinary course of our business, there are many transactions and calculations where the ultimate tax determination is uncertain. We are subject to audit by various tax authorities. Although we believe our tax estimates are reasonable, the final determination of tax audits and any related litigation could be materially different than that which is reflected in historical income tax provisions and accruals. Should additional taxes be assessed as a result of an audit or litigation, an adverse effect on our income tax provision and net income in the period or periods for which that determination is made could result.

Risks related to the debentures

The debentures are our unsecured junior obligations and are subordinated in right of payment to our existing and future senior debt obligations, including any secured debt we may incur.

The debentures are unsecured and subordinated in right of payment to all of our existing and future senior debt. Because the debentures are subordinate to our senior debt, if we experience:

 

•

a bankruptcy, liquidation or reorganization, or

 

•

an acceleration of the debentures due to an event of default under the indenture,

we will be permitted to make payments on the debentures only after we have satisfied all of our senior debt obligations. Also, if payment or other defaults occur on senior debt, payments on the debentures may be blocked indefinitely or for specified periods. Therefore, payments on the debentures may be delayed or not permitted or we may not have sufficient assets remaining to pay amounts due on any or all of the debentures.

 

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The indenture for the debentures does not limit our ability, or that of any of our presently existing or future subsidiaries, to incur senior debt, other indebtedness or other liabilities. As of June 30, 2007, we did not have any senior debt outstanding, and our subsidiaries had approximately $198.7 million of outstanding indebtedness and other liabilities, excluding deferred revenue, intercompany liabilities and liabilities of a type not required to be reflected on the balance sheet of such subsidiaries in accordance with generally accepted accounting principles. From time to time we and our subsidiaries may incur additional indebtedness, including senior debt, which could adversely affect our ability to pay our obligations under the debentures. We currently have a $500 million revolving credit facility. To the extent we make any borrowings under this facility, these amounts would constitute senior debt.

In addition, the debentures are be secured by any of our assets or those of our subsidiaries. As a result, the debentures are effectively subordinated to any secured debt we may incur. In any liquidation, dissolution, bankruptcy or other similar proceeding, holders of our secured debt may assert rights against any assets securing such debt in order to receive full payment of their debt before those assets may be used to pay the holders of the debentures. In such an event, we may not have sufficient assets remaining to pay amounts due on any or all of the debentures.

We rely on certain of our subsidiaries as sources of cash and your right to receive payments on the debentures is effectively subordinated to all existing and future liabilities of our subsidiaries.

The debentures are obligations exclusively of VeriSign, and we conduct a considerable portion of our operations through our subsidiaries. During the year ended December 31, 2006 and the six months ended June 30, 2007, our subsidiaries generated 48% and 47%, respectively, of our consolidated revenue. Accordingly, dividends and advances from our subsidiaries are significant sources of cash for us. The amount of dividends available to us from our subsidiaries depends largely upon each subsidiary’s earnings and operating capital requirements. The terms of some of our subsidiaries’ future borrowing arrangements may limit the transfer of funds to us. In addition, the ability of our subsidiaries to make any payments to us will depend on their business and tax considerations and legal restrictions.

None of our subsidiaries have guaranteed our obligations under, or have any obligation to pay any amounts due on, the debentures. As a result, the debentures are effectively subordinated to all liabilities, including trade payables, of our subsidiaries. Our rights and the rights of our creditors, including holders of the debentures, to participate in the assets of any of our subsidiaries upon their liquidation or recapitalization will generally be subordinate to the prior claims of those subsidiaries’ creditors. At June 30, 2007, our subsidiaries had approximately $198.7 million of outstanding indebtedness and other liabilities, excluding deferred revenue, intercompany liabilities and liabilities of a type not required to be reflected on the balance sheet of such subsidiaries in accordance with generally accepted accounting principles.

The debentures do not contain restrictive covenants and we may incur substantially more debt or take other actions which may affect our ability to satisfy our obligations under the debentures.

The indenture governing the debentures does not contain any financial or operating covenants or restrictions on the incurrence of indebtedness (including secured debt), the payments of dividends or the issuance or repurchase of securities by us or any of our subsidiaries, except, with respect to our payment of dividends or the repurchase of our securities, during any extension of the interest payment period for the debentures. See “Description of Debentures—Option to extend interest payment period.” In addition, the limited covenants applicable to the debentures do not require us to achieve or maintain any minimum financial results relating to our financial position or results of operations.

Our ability to recapitalize, incur additional debt and take a number of other actions that are not limited by the terms of the debentures could have the effect of diminishing our ability to make payments on the debentures when due, and require us to dedicate a substantial portion of our cash flow from operations to payments on our

 

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indebtedness, which would reduce the availability of cash flow to fund our operations, working capital and capital expenditures.

Some significant restructuring transactions may not constitute a fundamental change, in which case we would not be obligated to offer to repurchase the debentures.

Upon the occurrence of a fundamental change, you will have the right to require us to repurchase the debentures. However, the fundamental change provisions will not afford protection to holders of debentures in the event of certain transactions. For example, any leveraged recapitalization, refinancing, restructuring, or acquisition initiated by us will generally not constitute a fundamental change requiring us to repurchase the debentures. In the event of any such transaction, holders of the debentures will not have the right to require us to repurchase the debentures, even though any of these transactions could increase the amount of our indebtedness, or otherwise adversely affect our capital structure or any credit ratings, thereby adversely affecting the holders of debentures.

Restricted convertibility of the debentures could result in your receiving less than the value of the cash and common stock, if any, into which a debenture would otherwise be convertible.

The debentures are convertible only if specified conditions are met. If these conditions are not met, you will not be able to convert your debentures, and you will not be able to receive the cash and/or common stock, into which the debentures would otherwise be convertible.

Upon conversion of the debentures, we will pay a settlement amount consisting of cash and/or shares of our common stock based upon a specified observation period, and you may receive less proceeds than expected.

We will satisfy our conversion obligation to holders by delivering cash, shares of our common stock or any combination thereof, at our option. If we satisfy our conversion obligation solely in cash or through delivery of a combination of cash and shares of our common stock, the settlement amount will be based on a daily conversion value calculated on a proportionate basis for each trading day in the 30 trading day observation period, which generally will not commence until four trading days after the related conversion date. Accordingly, upon conversion of a debenture, holders might not receive any shares of our common stock, or they might receive fewer shares of common stock than would be implied by the conversion value of the debenture as of the conversion date (as defined under “Description of Debentures”). This is particularly true with respect to any conversion occurring after the date of issuance of a notice of redemption as described under “Description of Debentures—Optional redemption,” for which the observation period will begin on the 32nd scheduled trading day prior to the applicable redemption date. In addition, because of the 30 trading day observation period and the date on which it commences, settlement of conversions settled solely in cash or in a combination of cash and shares of our common stock generally will be delayed until at the least the 37th trading day following the related conversion date. See “Description of Debentures.” Upon conversion of the debentures, you may receive consideration worth less than the conversion value of the debenture as of the conversion date because the value of our common stock may decline (or not appreciate as much as you may expect) between the conversion date and the end of the observation period.

Our failure to convert the debentures into cash and/or shares of our common stock upon exercise of a holder’s conversion right in accordance with the provisions of the indenture would constitute a default under the indenture. In addition, a default under the indenture could lead to a default under existing and future agreements governing our indebtedness. If, due to a default, the repayment of related indebtedness were to be accelerated after any applicable notice or grace periods, we may not have sufficient funds to repay such indebtedness and the debentures.

The conversion rate of the debentures may not be adjusted for all dilutive events.

The conversion rate of the debentures is subject to adjustment for certain events, including, but not limited to, the issuance of stock dividends on our common stock, the issuance of certain rights or warrants, subdivisions,

 

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combinations, distributions of capital stock, indebtedness or assets, cash dividends and certain issuer tender or exchange offers as described under “Description of Debentures—Conversion rights—Conversion rate adjustments.” However, the conversion rate will not be adjusted for other events, such as a third-party tender or exchange offer or an issuance of common stock for cash, that may adversely affect the trading price of the debentures or the common stock. An event that adversely affects the value of the debentures may occur, and that event may not result in an adjustment to the conversion rate.

The adjustment to the conversion rate for debentures converted in connection with certain fundamental changes may not adequately compensate you for any lost value of your debentures as a result of such transaction.

If a fundamental change occurs, under certain circumstances we will increase the conversion rate by a number of additional shares of our common stock for debentures converted in connection with such fundamental change. The increase in the conversion rate will be determined based on the date on which the fundamental change becomes effective and the price paid per share of our common stock in such transaction, as described below under “Description of Debentures— Conversion rights—Adjustments to shares delivered upon conversion in connection with certain fundamental changes.” The adjustment to the conversion rate for debentures converted in connection with a fundamental change may not adequately compensate you for any lost value of your debentures as a result of such transaction. In addition, if the price of our common stock in the transaction is greater than $98.00 per share or less than $28.64 (in each case, subject to adjustment), no adjustment will be made to the conversion rate. In addition, in no event will the total number of shares of common stock issuable upon conversion exceed 34.9162 per $1,000 principal amount of debentures, subject to adjustments in the same manner as the conversion rate as set forth under “Description of Debentures—Conversion rights—Conversion rate adjustments.”

Our obligation to increase the conversion rate in connection with any such fundamental change could be considered a penalty, in which case the enforceability thereof would be subject to general principles of reasonableness of economic remedies.

If the market price of our common stock decreases, the market price of the debentures may similarly decrease.

We expect that the market price of the debentures will be significantly affected by the market price of our common stock. This may result in greater volatility in the market price of the debentures than would be expected for debt securities. The market price of our common stock will likely continue to fluctuate in response to factors including the factors discussed elsewhere in the sections of this prospectus titled “Risk Factors” many of which are beyond our control. For instance, the price of our common stock could be affected by sales of our common stock by investors who view the debentures as a more attractive means of equity participation in our company than our common stock, or by other hedging or arbitrage trading activity that may develop involving our common stock. This hedging or arbitrage could, in turn, affect the trading price of the debentures.

We have not historically maintained substantial levels of indebtedness, and our financial condition and results of operations could be adversely affected if we do not effectively manage our liabilities.

As a result of the sale of the debentures, we have a substantially greater amount of long term debt than we have maintained in the past. In addition to our issuance of the debentures, we have a revolving credit facility with a borrowing capacity of $500 million. While we currently have no outstanding borrowings under our credit facility, its availability allows us immediate access to domestic working capital if we identify opportunities for the use of this cash. Our maintenance of substantial levels of debt could adversely affect our flexibility to take advantage of corporate opportunities and could adversely affect our financial condition and results of operations.

 

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The debentures may not have an active market and their price may be volatile. You may be unable to sell your debentures at the price you desire or at all.

There is no existing trading market for the debentures. As a result, there can be no assurance that a liquid market will develop or be maintained for the debentures, that you will be able to sell any of the debentures at a particular time (if at all) or that the prices you receive if or when you sell the debentures will be above their initial offering price. We do not intend to list the debentures on any national securities exchange. The initial purchaser of the debentures has advised us that it intends to make a market in the debentures after this offering is completed, but it has no obligation to do so and may cease its market-making at any time without notice. In addition, market-making will be subject to the limits imposed by the Securities Act and the Securities Exchange Act of 1934, as amended, or the Exchange Act, and may be limited during the pendency of any shelf registration statement or exchange offer. The liquidity of the trading market in these debentures, and the market price quoted for these debentures, may be adversely affected by, among other things:

 

•

changes in the overall market for debt securities;

 

•

changes in our financial performance or prospects;

 

•

the prospects for companies in our industry generally;

 

•

the number of holders of the debentures;

 

•

the interest of securities dealers in making a market for the debentures; and

 

•

prevailing interest rates.

The debentures may not be rated or may receive a lower rating than anticipated.

We do not intend to seek a rating on the debentures. However, if one or more rating agencies rates the debentures and assigns the debentures a rating lower than the rating expected by investors, or reduces their rating in the future, the market price of the debentures and our common stock could be harmed.

We may not have the ability to repurchase the debentures in cash upon the occurrence of a fundamental change, or to pay cash upon the conversion of debentures, as required by the indenture governing the debentures.

Holders of the debentures will have the right to require us to repurchase the debentures upon the occurrence of a fundamental change as described under “Description of Debentures.” Although currently we have the intention and the ability to settle the principal amount of the convertible debentures in cash, we may not have sufficient funds to repurchase the debentures in cash or to make the required repayment at such time or have the ability to arrange necessary financing on acceptable terms. In addition, upon conversion of the debentures, we will be required to make cash payments to the holders of the debentures equal to the lesser of the principal amount of the debentures being converted and the conversion value of those debentures as described in under “Description of Debentures.” Such payments could be significant, and we may not have sufficient funds to make them at such time.

A fundamental change may also constitute an event of default or prepayment under, or result in the acceleration of the maturity of, our then-existing indebtedness. Our ability to repurchase the debentures in cash or make any other required payments may be limited by law or the terms of other agreements relating to our indebtedness outstanding at the time. Our failure to repurchase the debentures or pay cash in respect of conversions when required would result in an event of default with respect to the debentures.

Conversion of the debentures will dilute the ownership interest of existing stockholders, including holders who had previously converted their debentures.

The conversion of some or all of the debentures will dilute the ownership interests of existing stockholders. Any sales in the public market of the common stock issuable upon such conversion could adversely affect

 

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prevailing market prices of our common stock. In addition, the existence of the debentures may encourage short selling by market participants because the conversion of the debentures could be used to satisfy short positions, or anticipated conversion of the debentures into shares of our common stock could depress the price of our common stock.

If you hold debentures, you will not be entitled to any rights with respect to our common stock, but you will be subject to all changes made with respect to our common stock.

If you hold debentures, you will not be entitled to any rights with respect to our common stock (including, without limitation, voting rights and rights to receive any dividends or other distributions on our common stock, other than extraordinary dividends that our board of directors designates as payable to the holders of the debentures), but if you subsequently convert your debentures into common stock, you will be subject to all changes affecting the common stock. You will have rights with respect to our common stock only if and when we deliver shares of common stock to you upon conversion of your debentures and, to a limited extent, under the conversion rate adjustments applicable to the debentures. For example, in the event that an amendment is proposed to our restated certificate of incorporation or bylaws requiring stockholder approval and the record date for determining the stockholders of record entitled to vote on the amendment occurs prior to delivery of common stock to you, you will not be entitled to vote on the amendment, although you will nevertheless be subject to any changes in the powers or rights of our common stock that result from such amendment.

Our stock price has historically been volatile and may continue to be volatile. The price of our common stock, and therefore the price of the debentures, may fluctuate significantly, which may make it difficult for holders to resell the debentures or the shares of our common stock issuable upon conversion of the debentures when desired or at attractive prices.

The trading price of our common stock has been and may continue to be subject to wide fluctuations. Since the fiscal year ended December 31, 2006, the closing sale price of our common stock on The Nasdaq Global Select Market ranged from $22.92 to $35.42 per share, and the closing sale price on November 1, 2007 was $32.26 per share. Our stock price may fluctuate in response to a number of events and factors, such as quarterly variations in operating results, announcements of technological innovations or new products by us or our competitors, changes in financial estimates and recommendations by securities analysts, the operating and stock price performance of other companies that investors may deem comparable to us, and new reports relating to trends in our markets or general economic conditions.

In the past, many companies have been the subject of securities class action litigation following periods of volatility in the market price of their stock. If we become involved in securities class action litigation in the future, it could result in substantial costs and diversion of our management’s attention and resources and could harm our stock price, business, prospects, results of operations and financial condition.

In addition, the stock market in general, and prices for companies in our industry, have experienced extreme volatility that often has been unrelated to the operating performance of such companies. These broad market and industry fluctuations may adversely affect the price of our stock, regardless of our operating performance. Because the debentures are convertible into shares of our common stock, volatility or depressed prices of our common stock could have a similar effect on the trading price of our debentures. Holders who receive common stock upon conversion also will be subject to the risk of volatility and depressed prices of our common stock. In addition, the existence of the debentures may encourage short selling in our common stock by market participants because the conversion of the debentures could depress the price of our common stock.

Additionally, volatility or a lack of positive performance in our stock price may adversely affect our ability to retain key employees.

 

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Sales of a significant number of shares of our common stock in the public markets, or the perception of such sales, could depress the market price of the debentures.

Sales of a substantial number of shares of our common stock or other equity-related securities in the public markets could depress the market price of the debentures, our common stock, or both, and impair our ability to raise capital through the sale of additional equity securities. We cannot predict the effect that future sales of our common stock or other equity-related securities would have on the market price of our common stock or the value of the debentures. The price of our common stock could be affected by possible sales of our common stock by investors who view the debentures as a more attractive means of equity participation in our company and by hedging or arbitrage trading activity which we expect to occur involving our common stock. This hedging or arbitrage could, in turn, affect the market price of the debentures.

You may be subject to tax if we make or fail to make certain adjustments to the conversion rate of the debentures even though you do not receive a corresponding cash distribution.

The conversion rate of the debentures is subject to adjustment in certain circumstances, including the payment of certain cash dividends. If the conversion rate is adjusted as a result of a distribution that is taxable to our common stockholders, such as a cash dividend, you may be deemed to have received a taxable dividend subject to U.S. federal income tax without the receipt of any cash. In addition, a failure to adjust (or to adjust adequately) the conversion rate after an event that increases your proportionate interest in our company could be treated as a deemed taxable dividend to you.

If certain types of fundamental changes occur on or prior to the maturity date of the debentures, under some circumstances, we will increase the conversion rate for debentures converted in connection with the fundamental change. Such increase may also be treated as a distribution subject to U.S. federal income tax as a dividend. See “Material U.S. Federal Income Tax Considerations.”

If you are a non-U.S. holder (as defined in “Material U.S. Federal Income Tax Considerations”), any deemed dividend would be subject to U.S. federal withholding tax at a 30% rate, or such lower rate as may be specified by an applicable treaty, which may be set off against subsequent payments. See “Material U.S. Federal Income Tax Considerations.”

U.S. holders will recognize income for U.S. federal income tax purposes in excess of the current cash payments on the debentures and will recognize ordinary income on the disposition of the debentures.

Pursuant to the terms of the indenture, we and each holder of the debentures agreed to treat the debentures, for U.S. federal income tax purposes, as “contingent payment debt instruments.” Under this characterization, the debentures will be treated as issued with original issue discount for U.S. federal income tax purposes, and each U.S. holder will be required to include such original issue discount in gross income as it accrues regardless of the holder’s method of tax accounting. The amount of original issue discount required to be included in the holder’s gross income for each year generally will be in excess of the payments and accruals on the debentures for non-tax purposes and in advance of the receipt of cash or other property attributable thereto in that year. A U.S. holder will recognize gain or loss on the sale, exchange, conversion, repurchase or redemption of a debenture in an amount equal to the difference between the amount realized, including the fair market value of any of our common stock received, and the holder’s adjusted tax basis in the debenture. Any such gain will be treated as ordinary interest income and any such loss will be ordinary loss to the extent of the interest previously included in gross income and, thereafter, capital loss. All holders should read the discussion of the United States federal income tax consequences of the purchase, ownership, and the disposition of the debentures that is contained in this prospectus under the heading “Material U.S. Federal Income Tax Considerations.”

 

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RATIO OF EARNINGS TO FIXED CHARGES

The financial information provided in the following table should be read in conjunction with our consolidated financial statements and the related notes incorporated by reference into this prospectus. The following table sets forth our ratio of earnings to fixed charges for each of the periods indicated:

 

Year ended December 31,										Six Months Ended, June 30, 2007
2002		2003		2004		2005		2006
(2,691.0)		(136.2)		113.7		152.9		13.9		20.6

The ratio of earnings to fixed charges is computed by dividing (i) income from continuing operations before income taxes plus fixed charges by (ii) fixed charge. Our fixed charges consist of the portion of operating lease rental expense that is representative of the interest factor and interest expense on indebtedness.

USE OF PROCEEDS

We will not receive any proceeds from sales of the debentures or shares of our common stock underlying the debentures by the selling securityholders.

DIVIDEND POLICY

We have never declared or paid any cash dividends on our capital stock. We do not anticipate paying any cash dividends on our capital stock in the foreseeable future. In addition, the terms of our senior unsecured revolving credit facility which we entered into in June 2006 and amended in September 2007 restricts our ability to pay dividends if an event of default has occurred and is continuing.

 

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PRICE RANGE OF COMMON STOCK

Our common stock is traded on The Nasdaq Global Select Market under the symbol “VRSN.” The following table sets forth, for the periods indicated, the high and low sales prices per share of our common stock as reported by The Nasdaq Global Select Market.

 

		High			Low
Year ending December 31, 2007:
Fourth Quarter (through November 1, 2007)		$	35.42		$	32.21
Third Quarter		$	34.68		$	27.77
Second Quarter			32.12			24.83
First Quarter			26.78			22.92
Year ended December 31, 2006:
Fourth Quarter			26.77			19.90
Third Quarter			23.27			15.95
Second Quarter			25.45			20.91
First Quarter			25.00			20.75
Year ended December 31, 2005:
Fourth Quarter			24.48			19.01
Third Quarter			30.99			20.29
Second Quarter			33.36			24.65
First Quarter			33.67			24.48

On September 30, 2007, there were approximately 840 registered holders of record of our common stock; although we believe there are approximately 175,000 beneficial owners since many brokers and other institutions hold our stock on behalf of stockholders. On November 1, 2007, the reported last sale price of our common stock was $32.26 per share as reported by The Nasdaq Global Select Market.

 

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SELECTED CONSOLIDATED FINANCIAL DATA

The consolidated balance sheet as of December 31, 2005 and the consolidated statements of income for the years ended December 31, 2005 and 2004 have been restated as described in our Annual Report on Form 10-K for the year ended December 31, 2006 and incorporated herein by reference. The data for the consolidated balance sheets as of December 31, 2004, 2003 and 2002 and the consolidated statements of operations for the fiscal years ended December 31, 2003 and 2002 have been restated, but such restated data has not been audited and is derived from our books and records. The selected consolidated statement of income data for the six months ended June 30, 2007 and 2006 and the selected consolidated balance sheet data as of June 30, 2007 have been derived from our unaudited consolidated financial statements, which are included elsewhere in this prospectus. We have prepared the unaudited consolidated financial information set forth below on the same basis as our audited consolidated financial statements and have included all adjustments, consisting only of normal recurring adjustments, that we consider necessary for a fair presentation of our financial position and operating results for such periods.

The information set forth below is not necessarily indicative of results of future operations, and should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and related notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2006 and Quarterly Report on Form 10-Q for the six months ended June 30, 2007 and incorporated herein by reference to fully understand factors that may affect the comparability of the information presented below. The information presented in the following tables has been adjusted to reflect the restatement of the Company’s financial results, which is more fully described in Note 2, “Restatement of Consolidated Financial Statements” in Notes to Consolidated Financial Statements contained in our Annual Report on Form 10-K for the year ended December 31, 2006.

We have completed a number of acquisitions over the last three fiscal years, each of which was accounted for as a purchase transaction, which may affect year-over-year comparisons of our selected financial data. See a description of such acquisitions fully described in Note 3, “Business Combinations” of our Notes to Consolidated Financial Statements contained in our Annual Report on Form 10-K for the year ended December 31, 2006. Accordingly, the results of the acquired companies’ operations are included in our consolidated financial statements from their respective dates of acquisition. We sold certain assets related to our payment gateway business in November 2005 and assets related to our Jamba Services subsidiary in September 2007. We accounted for these businesses as discontinued operations and accordingly, we have reclassified the selected financial data for all periods to reflect these businesses as discontinued operations. We completed the sale of our Network Solutions domain name registrar business in November 2003.

 

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Selected Consolidated Statements of Operations Data: (in millions, except per share data)

 

		Year Ended December 31,																	Six Months Ended June 30,
		2006 (1)			2005 (2)			2004			2003 (3)				2002 (3)				2007			2006
Continuing Operations:
Revenues		$	1,563		$	1,605		$	1,117		$	1,017			$	1,195			$	736		$	758
Net income (loss)			374			162			134			(294	)			(4,999	)			55			391
Net income (loss) from continuing operations per share:
Basic		$	1.53		$	0.63		$	0.53		$	(1.23	)		$	(21.13	)		$	0.22		$	1.59
Diluted		$	1.51		$	0.62		$	0.52		$	(1.23	)		$	(21.13	)		$	0.22		$	1.58
Discontinued Operations:
Revenues			12			60			52			38				27				9			6
Net income (loss)			5			267			19			7				(16	)			2			2
Net income (loss) from discontinued operations per share:
Basic		$	0.02		$	1.04		$	0.08		$	0.03			$	(0.07	)		$	0.01		$	0.01
Diluted		$	0.02		$	1.01		$	0.08		$	0.03			$	(0.07	)		$	0.01		$	0.01
Consolidated Total:
Net income (loss)			379			429			153			(287	)			(5,015	)			57			393
Net income (loss) per share:
Basic		$	1.55		$	1.67		$	0.61		$	(1.20	)		$	(21.20	)		$	0.23		$	1.60
Diluted		$	1.53		$	1.63		$	0.60		$	(1.20	)		$	(21.20	)		$	0.23		$	1.59

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(1)

Net income includes $349.8 million in income tax benefits that resulted from the release of our valuation allowance of $236.4 million from our deferred tax assets and recognizing a non-recurring benefit to tax expense of $113.4 million due to a favorable ruling received in the second quarter of 2006 relating to a capital loss generated in 2003.

(2)	Net income for 2005 includes gain on sale of discontinued operations of $250.6 million, net of tax.

(3)

In accordance with Statement of Financial Accounting Standards (“SFAS”) SFAS No 142, “Goodwill and Other Intangible Assets,” (“SFAS 142”) the consolidated statements of operations includes the impairment of goodwill and the amortization and impairment of other intangible assets totaling $335.2 million and $4.9 billion in 2003 and 2002, respectively.

Consolidated Balance Sheet Data: (in millions)

 

		December 31,															June 30, 2007
		2006			2005			2004			2003			2002
Total assets		$	3,974		$	3,181		$	2,599		$	2,102		$	2,392		$	3,690
Long-term liabilities (1)			6			16			26			39			33			11
Stockholders’ equity			2,377			2,023			1,691			1,377			1,575			2,521

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(1)	Other long-term liabilities include other long-term liabilities and long-term accrued restructuring costs.

 

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Supplementary Financial Information

The following tables set forth unaudited supplementary quarterly financial data for the two year period ended December 31, 2006 and the six month period ended June 30, 2007. In management’s opinion, the unaudited data has been prepared on the same basis as the audited information and includes all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of the data for the periods presented.

 

		2007
		First Quarter				Second Quarter
		(In thousands, except per share data)
Continuing operations:
Revenues		$	373,049			$	363,217
Costs and expenses			385,140				369,970
Operating income			(12,091	)			(6,753	)
Net income (loss)			60,413				(5,682	)
Net income (loss) per share:
Basic		$	0.24			$	(0.02	)
Diluted		$	0.24			$	(0.02	)
Discontinued operations:
Revenues		$	4,397			$	4,407
Costs and expenses			2,787				2,743
Operating income			2,110				1,664
Net income (loss)			1,340				965
Net income per share:
Basic		$	0.01			$	—
Diluted		$	0.01			$	—
Total:
Net income (loss)		$	61,753			$	(4,717	)
Net income (loss) per share:
Basic		$	0.25			$	(0.02	)
Diluted		$	0.25			$	(0.02	)

 

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The following tables for selected quarterly unaudited supplementary quarterly financial information have been restated for all quarters of fiscal 2005 and the first quarter of fiscal 2006 from previously reported information filed on Form 10-Q and Form 10-K. All previously reported quarters of fiscal 2005 have been adjusted to show the discontinued operations from the sale of our payments gateway service in November 2005 and from the sale of our Jamba Service subsidiary in September 2007. Previously filed annual reports on Form 10-K and quarterly reports on Form 10-Q affected by the restatements have not been amended and should not be relied upon.

 

		2006
		First Quarter (2)			Second Quarter (3)			Third Quarter			Fourth Quarter				Year Ended December 31
		(In thousands, except per share data)
Continuing operations:
Revenues		$	370,109		$	387,832		$	396,418		$	408,639			$	1,562,998
Costs and expenses			358,600			357,670			372,514			383,330				1,472,114
Operating income			11,509			30,162			23,904			25,309				90,884
Net income (loss)			15,368			375,886			14,015			(30,969	)			374,300
Net income (loss) per share: (1)
Basic		$	0.06		$	1.54		$	0.06		$	(0.13	)		$	1.53
Diluted		$	0.06		$	1.52		$	0.06		$	(0.13	)		$	1.51
Discontinued operations:
Revenues		$	2,660			2,938		$	2,975		$	3,589			$	12,162
Costs and expenses			1,490			1,754			1,218			1,719				6,181
Operating income			1,170			1,184			1,757			1,870				5,981
Net income (loss)			1,118			901			1,259			1,437				4,715
Net income per share: (1)
Basic		$	0.01		$	—		$	—		$	0.01			$	0.02
Diluted		$	0.01		$	—		$	—		$	0.01			$	0.02
Total:
Net income (loss)		$	16,486		$	376,787		$	15,274		$	(29,532	)		$	379,015
Net income (loss) per share: (1)
Basic		$	0.07		$	1.54		$	0.06		$	(0.12	)		$	1.55
Diluted		$	0.07		$	1.52		$	0.06		$	(0.12	)		$	1.53

 

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		2005
		First Quarter			Second Quarter			Third Quarter			Fourth Quarter (4)			Year Ended December 31
		(In thousands, except per share data)
Continuing operations:
Revenues		$	386,403		$	432,236		$	399,107		$	386,831		$	1,604,577
Costs and expenses			319,537			374,895			331,420			363,286			1,389,138
Operating income			66,866			57,341			67,687			23,545			215,439
Net income			53,996			35,979			51,796			20,154			161,925
Net income per share: (1)
Basic		$	0.21		$	0.13		$	0.20		$	0.08		$	0.63
Diluted		$	0.21		$	0.13		$	0.19		$	0.08		$	0.61
Discontinued operations:
Revenues		$	15,433		$	16,407		$	17,067		$	10,762		$	59,669
Costs and expenses			9,077			9,830			9,415			5,849			34,171
Operating income			6,356			6,577			7,652			4,913			25,498
Net income			3,973			4,261			5,053			253,766			267,053
Net income per share: (1)
Basic		$	0.02		$	0.02		$	0.02		$	1.01		$	1.04
Diluted		$	0.01		$	0.02		$	0.02		$	0.99		$	1.01
Total:
Net income		$	57,969		$	40,240			56,849		$	273,920		$	428,978
Net income per share: (1)
Basic		$	0.23		$	0.15		$	0.22		$	1.09		$	1.67
Diluted		$	0.22		$	0.15		$	0.21		$	1.07		$	1.63

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(1)

Net income (loss) per share is computed independently for each of the quarters represented in accordance with Statement of Financial Accounting Standards No. 128, “Earnings per Share.” Therefore, the sum of the quarterly net income (loss) per share may not equal the total computed for the fiscal year or any cumulative interim period.

(2)	Net income for the first quarter ended March 31, 2006 includes a $21.7 million gain on from sale of our remaining equity stake in Network Solutions that was previously written off.

(3)

Net income for the second quarter ended June 30, 2006, includes the release of our valuation allowance of $236.4 million from our deferred tax assets resulting in a non-recurring benefit to tax expense and a $113.3 million tax benefit that was the result of a favorable ruling from the Internal Revenue Service relating to an uncertain tax position on a capital loss generated in 2003.

(4)	Net income for 2005 includes gain on sale of discontinued operations of $250.6 million, and other charges of approximately $21.6 million related to the abandonment of the development efforts related to an internally developed software project.

Our quarterly revenues and operating results are difficult to forecast. Therefore, we believe that period-to-period comparisons of our operating results will not necessarily be meaningful, and should not be relied upon as an indication of future performance. Also, operating results may fall below our expectations and the expectations of securities analysts or investors in one or more future quarters. If this were to occur, the market price of our common stock would likely decline. For more information regarding the quarterly fluctuation of our revenues and operating results, see “Risk Factors—Our operating results may fluctuate and our future revenues and profitability are uncertain.”

 

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MANAGEMENT

The following table sets forth information regarding our executive officers and directors as of September 30, 2007:

 

Name		Age		Position
William A. Roper, Jr.		61		President, Chief Executive Officer and Director
Aristotle N. Balogh.		43		Executive Vice President and Chief Technology Officer
Grant L. Clark.		53		Senior Vice President and Chief Administrative Officer
John M. Donovan		47		Executive Vice President, Global Sales and Consulting Services
Albert E. Clement		45		Senior Vice President, Finance and Chief Financial Officer
Richard H. Goshorn		51		Senior Vice President, General Counsel and Secretary
Robert J. Korzeniewski		50		Executive Vice President, Corporate Development
Anne-Marie Law		40		Senior Vice President, Global Human Resources
Russell S. Lewis		52		Senior Vice President, Strategic Development
Mark D. McLaughlin		41		Executive Vice President, Products and Marketing
Kevin A. Werner		47		Senior Vice President, Corporate Development and Strategy
D. James Bidzos (1)		52		Chairman of the Board of Directors
William L. Chenevich (2)		63		Director
Louis A. Simpson (3)		70		Director
Scott G. Kriens (1)		50		Director
Michelle Guthrie (3)		41		Director
Roger H. Moore (2)		65		Director
John D. Roach(2)		63		Director

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(1)	Member of our nominating and corporate governance committee.

(2)	Member of our audit committee.

(3)	Member of our compensation committee.

William A. Roper, Jr. has served as President and Chief Executive Officer since May 2007 and has served as a director since November 2003. From April 2000 through May 2007, he served as Corporate Executive Vice President of Science Applications International Corporation (“SAIC”), a diversified technology services company, and has previously served as SAIC’s Senior Vice President from 1990 to 1999, Chief Financial Officer from 1990 to 2000, and Executive Vice President from 1999 to 2000. Mr. Roper holds a B.A. degree in Mathematics from the University of Mississippi and graduate degrees from Southwestern Graduate School of Banking at Southern Methodist University and Stanford University, Financial Management Program.

Aristotle N. Balogh has served as Executive Vice President and Chief Technology Officer since January 2007. From May 2006 to January 2007, Mr. Balogh served as Executive Vice President, Operations and Infrastructure. From May 2002 to May 2006, Mr. Balogh served as Senior Vice President, Operations and Infrastructure. From 1999 to 2002, Mr. Balogh served as Vice President of Engineering at VeriSign and Network Solutions. Prior to that, he held a variety of positions at Network Solutions. Prior to joining Network Solutions in 1998, Mr. Balogh held a variety of senior engineer and management roles at SRA Corporation, UPS’s Roadnet Technologies, and Westinghouse Electric Corporation. Mr. Balogh holds a B.S. degree in Electrical Engineering and Computer Science and an M.S.E. degree in Electrical and Computer Engineering from the Whiting School of Engineering at Johns Hopkins University.

Albert E. Clement has served as Senior Vice President, Finance and Chief Financial Officer since July 2007. He served as Senior Vice President, Finance, and Controller since January 2001. From January to December 2000, he served as Controller of Network Solutions, which was acquired by VeriSign in June 2000. Prior to joining Network Solutions, Mr. Clement held senior financial positions at BroadPoint Communications and MCI from 1996 to 2000. Prior to that, Mr. Clement spent twelve years in various capacities at

 

38

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PricewaterhouseCoopers LLP. He is a certified public accountant and holds a Bachelor of Accountancy from George Washington University.

Grant L. Clark has served as Senior Vice President and Chief Administrative Officer since October 2007. From January 2004 until joining VeriSign, Mr. Clark served as senior vice president and chief deputy counsel of SAIC, Inc., a diversified information technology services company. From November 1999 until January 2004, he was senior vice president and general counsel of Telcordia Technologies, a SAIC subsidiary. Mr. Clark holds a B.A. degree in English from Framingham State College and a J.D. degree from Suffolk Law School.

John M. Donovan has served as Executive Vice President, Global Sales and Consulting Services, since November 2006 when VeriSign acquired inCode Telecom Group, Inc., a wireless consulting company. He served as Chief Executive Officer and Chairman of the Board of Directors of inCode from November 2000 to November 2006. Prior to joining inCode, Mr. Donovan was with Deloitte Consulting from 1994 to 2000, where he was a partner from 1997 to 2000 and held the position of Americas Industry Practice Director for Telecom. Mr. Donovan holds a B.S. degree in Electrical Engineering from the University of Notre Dame and an MBA degree in Finance from the University of Minnesota.

Richard H. Goshorn has served as Senior Vice President, General Counsel and Secretary since June 2007. From October 2004 to May 2007, he served as General Counsel for Akin Gump Strauss Hauer & Feld, LLP, a law firm. From 2002 to 2003, Mr. Goshorn was Corporate Vice President, General Counsel and Secretary of Acterna Corporation, a public communications test equipment company. From 1991 to 2001 he held a variety of senior executive legal positions with London-based Cable and Wireless PLC, a telecommunications company, including the position of Senior Vice President and General Counsel, Cable & Wireless Global. Mr. Goshorn holds a B.A. degree in Economics from the College of Wooster and a J.D. degree from Duke University’s School of Law.

Robert J. Korzeniewski has served as Executive Vice President of Corporate Development since January 2007. From June 2000 to January 2007, Mr. Korzeniewski served as Executive Vice President of Corporate and Business Development. He served as Chief Financial Officer of Network Solutions from March 1996 until June 2000 when Network Solutions was acquired by VeriSign. Prior to joining Network Solutions, Mr. Korzeniewski held various senior financial positions at Science Application International Company from 1987 to March 1996. Mr. Korzeniewski serves as a director of Kintera, Inc. Mr. Korzeniewski is a certified public accountant and holds a B.S. degree in Business Administration from Salem State College.

Anne-Marie Law has served as Senior Vice President, Global Human Resources since August 2007. From May 2007 to July 2007, she served as Vice President, Global Human Resources. From 1999 to April 2007, Ms. Law served in a variety of senior capacities within the human resources department of Xilinx, Inc, a provider of programmable solutions. Ms. Law holds a B.A. degree in Art History from Leicester University in the United Kingdom.

Russell S. Lewis has served as Senior Vice President, Strategic Development since January 2005. From February 2002 to December 2004, he served as General Manager, Naming and Directory Services and from March 2000 to February 2002, he served as Senior Vice President, Corporate Development. Since August 1999, he has served as President of Lewis Capital Group, LLC, an investment firm. Mr. Lewis serves as a director of Delta Petroleum Corporation. Mr. Lewis holds an M.B.A. degree with a concentration in finance and marketing from Harvard School of Business and a B.A. degree in Economics from Haverford College.

Mark D. McLaughlin has served as Executive Vice President, Products and Marketing, since January 2007. From May 2006 to January 2007, he was Executive Vice President and General Manager, Information Services. From December 2004 to May 2006, he was Senior Vice President and General Manager, Information Services. From November 2003 through December 2004, Mr. McLaughlin was Senior Vice President and Deputy General Manager of Information Services. From 2002 to 2003, he served as Vice President, Corporate Business

 

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Development and from 2000 to 2001 he was Vice President, General Manager of VeriSign Payment Services. Prior to joining VeriSign, Mr. McLaughlin was the Vice President, Business Development of Signio, an Internet payment company acquired by VeriSign in February 2000. Mr. McLaughlin holds a B.S. degree in Political Science from the U.S. Military Academy at West Point and a J.D. degree from the Seattle University School of Law.

Kevin A. Werner has served as Senior Vice President, Corporate Development and Strategy since September 2007. From February 2004 until joining VeriSign, Mr. Werner served as senior vice president, director of strategic development activities of SAIC, Inc., a diversified information technology services company. From April 2000 until January 2004, he was president and managing director of SAIC Venture Capital Corporation, a SAIC subsidiary. Mr. Werner holds a B.A. degree in Political Science from George Washington University and a J.D. degree from Harvard Law School.

D. James Bidzos has served as Chairman of the Board of Directors since August 2007 and from April 1995 until December 2001. He has served as Vice Chairman of the Board of Directors since December 2001. Mr. Bidzos served as Vice Chairman of RSA Security, an Internet identity and access management solution provider, from March 1999 to May 2002 and Executive Vice President from July 1996 to February 1999. Prior thereto, he served as President and Chief Executive Officer of RSA Data Security, Inc. from 1986 to February 1999.

William L. Chenevich has served as a director since April 1995. Mr. Chenevich has served as Vice Chairman of Technology and Operations for U.S. Bancorp, a financial holding company, since February 2001. He served as Vice Chairman of Technology and Operations Services of Firstar Corporation, a financial services company, from 1999 until its merger with U.S. Bancorp in February 2001. Prior thereto, he was Group Executive Vice President of VISA International, a financial services company, from 1994 to 1999. Mr. Chenevich holds a B.B.A. degree in Business from the City College of New York and a M.B.A. degree in Management from the City University of New York.

Louis A. Simpson has served as a director since May 2005. Since May 1993, he has served as President and Chief Executive Officer, Capital Operations, of GEICO Corporation, a passenger auto insurer. Mr. Simpson previously served as Vice Chairman of the Board of GEICO from 1985 to 1993. Mr. Simpson serves as a director of Science Applications International Corporation. Mr. Simpson holds a B.A. degree from Ohio Wesleyan University and a Masters degree in Economics from Princeton University.

Scott G. Kriens has served as a director since January 2001. Mr. Kriens has served as Chief Executive Officer and Chairman of the Board of Directors of Juniper Networks, a provider of Internet hardware and software systems, since October 1996. From April 1986 to January 1996, Mr. Kriens served as Vice President of Sales and Operations at StrataCom, Inc., a telecommunications equipment company, which he co-founded in 1986. Mr. Kriens serves as a director of Equinix, Inc. Mr. Kriens holds a B.A. in Economics from California State University, Hayward.

Michelle Guthrie has served as a director since December 2005. Since April 2007, she has served as a managing director of Providence Equity Partners, Inc., a private investment firm. From November 2003 to February 2007, she served as Chief Executive Officer of STAR, News Corporation’s Asian media and entertainment company. Ms. Guthrie previously served as STAR’s Executive Vice President from June 2003 and Senior Vice President from January 2001. Prior to joining STAR, Ms. Guthrie worked for FOXTEL in Australia and BSkyB and News International in the United Kingdom. Ms. Guthrie holds an Arts degree and a Law degree from the University of Sydney.

Roger H. Moore has served as a director since February 2002. Since June 2007, Mr. Moore has served as interim Chief Executive Officer of Arbinet-Thexchange, Inc., a provider of online trading services. He was President and Chief Executive Officer of Illuminet Holdings, Inc. from December 1995 until December 2001

 

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when VeriSign acquired Illuminet Holdings. Prior to Illuminet Holdings, Mr. Moore spent ten years with Nortel Networks in a variety of senior management positions including President of Nortel Japan. Mr. Moore serves as a director of Western Digital Corporation, Consolidated Communications Illinois Holdings, Inc., and Arbinet-Thexchange, Inc. Mr. Moore holds a B.S. degree in General Science from Virginia Polytechnic Institute and State University.

John D. Roach has served as a director since July 2007. Mr. Roach has served as Chairman of the Board of Directors and Chief Executive Officer of Stonegate International, a private investment and advisory services company, since October 2001. From November 2002 to January 2006, he served as Executive Chairman of Unidare U.S., a subsidiary of Unidare plc, a public Irish financial holding company and supplier of products to the welding, safety and industrial markets. From 1998 to 2001, he served as Founder and Chairman, President and Chief Executive Officer of Builders FirstSource, Inc., a distributor of building products. Prior to that, he was Chairman, President and Chief Executive Officer of Fibreboard Corporation, a building products company, from July 1991 to July 1997 when it was acquired by Owens Corning. Mr. Roach serves as a director of PMI Group, Inc. and URS Corporation. Mr. Roach holds a B.S. degree in Industrial Management from M.I.T. and a MBA degree from Stanford University.

 

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DESCRIPTION OF DEBENTURES

We issued the debentures under an indenture dated as of August 20, 2007 between us and U.S. Bank National Association, as trustee (the “Trustee”). The terms of the debentures include those expressly set forth in the indenture and those made part of the indenture by reference to the Trust Indenture Act of 1939, as amended (the “Trust Indenture Act”). The debentures and the shares of common stock issuable upon conversion of the debentures will be covered by a registration rights agreement dated as of August 20, 2007.

A copy of the indenture and the registration rights agreement is filed as exhibits to our Current Report on Form 8-K that was filed with the SEC on September 6, 2007. You may also request a copy of the indenture and the registration rights agreement from us as described under “Where You Can Find More Information.”

The following description is a summary of the material provisions of the debentures, the indenture and the registration rights agreement and does not purport to be complete. This summary is subject to and is qualified by reference to all the provisions of the debentures, the indenture and the registration rights agreement, including the definitions of certain terms used in the indenture. We urge you to read the indenture because it, and not this description, defines your rights as a holder of the debentures.

For purposes of this description, references to “the Company,” “VeriSign,” “we,” “our” and “us” refer only to VeriSign, Inc. and not to its subsidiaries.

General

The debentures

The debentures:

 

•

are our general unsecured, junior subordinated obligations;

 

•

are limited to an aggregate principal amount of $1,300,000,000;

 

•

will mature on August 15, 2037 (the “maturity date”), unless earlier converted, redeemed or repurchased;

 

•

are issued in denominations of $1,000 and integral multiples of $1,000;

 

•

are represented by one or more registered debentures in global form, but in certain limited circumstances may be represented by debentures in certificated form. See “Book-entry, settlement and clearance”; and

 

•

are subordinated in right of payment to our existing and future senior debt and to all indebtedness and other liabilities of our subsidiaries.

The debentures will bear ordinary interest from August 20, 2007 at a rate of 3.25% per year and, under certain circumstances as described below, may also bear contingent interest, additional interest, reporting additional interest, deferred interest and/or compounded interest. For purposes of this description, references to “interest” include all such forms of interest except as otherwise indicated.

Subject to the fulfillment of certain conditions and during the periods described below, the debentures may be converted at an initial conversion rate of 29.0968 shares of common stock per $1,000 principal amount of debentures (equivalent to a conversion price of approximately $34.37 per share of common stock). The conversion rate is subject to adjustment if certain events occur. Upon conversion of debentures, we will satisfy our conversion obligation by delivering cash, shares of our common stock or any combination thereof, at our option, as described below under “Conversion rights—Payment upon conversion.” Upon conversion of debentures, you will not receive any separate payment for accrued and unpaid interest, except under the limited circumstances described below under “Conversion rights—General.”

 

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The indenture does not limit the amount of debt that may be issued by us or our subsidiaries, restrict the incurrence of liens, restrict the payment of dividends, restrict the issuance or repurchase of our securities (except with respect to our payment of dividends or the repurchase of our securities, during any extension of the interest payment period for the debentures) or contain financial covenants. Other than restrictions described under “Fundamental change permits holders to require us to repurchase debentures” and “Consolidation, merger and sale of assets” below, and except for the provisions set forth under “Conversion rights—Conversion rate adjustments—Adjustment to shares delivered upon conversion in connection with certain fundamental changes,” the indenture does not contain any covenants or other provisions designed to afford holders of the debentures protection in the event of a highly leveraged transaction involving us or in the event of a decline in our credit rating as the result of a takeover, recapitalization, highly leveraged transaction or similar restructuring involving us that could adversely affect such holders.

We may, without the consent of the holders, issue additional debentures under the indenture with the same terms and with the same CUSIP numbers as the debentures offered hereby in an unlimited aggregate principal amount, provided that such additional debentures must be fungible with the debentures offered hereby for U.S. federal income tax purposes. We may also from time to time repurchase the debentures in open market purchases or negotiated transactions without prior notice to holders.

We do not intend to list the debentures on a securities exchange or interdealer quotation system.

We use the term “debenture” in this prospectus to refer to each $1,000 principal amount of debentures. We use the term “common stock” in this prospectus to refer to our common stock, $0.001 par value.

Payments on the debentures; paying agent and registrar; transfer and exchange

We will pay principal of and interest on debentures in global form registered in the name of, or held by, The Depository Trust Company (“DTC”) or its nominee in immediately available funds to DTC or its nominee, as the case may be, as the registered holder of such global debentures.

We will pay principal of certificated debentures at the office or agency designated by us for that purpose. We have initially designated the trustee as our paying agent and registrar and its corporate trust office in New York, New York, as a place where debentures may be presented for payment or for registration of transfer. We may, however, change the paying agent or registrar without prior notice to the holders of the debentures, and we may act as paying agent or registrar. Interest on certificated debentures will be payable (i) to holders having an aggregate principal amount of $5,000,000 or less, by check mailed to the holders of these debentures and (ii) to holders having an aggregate principal amount of more than $5,000,000, either by check mailed to each holder or, upon application by a holder to the registrar not later than the relevant record date (as defined below), by wire transfer in immediately available funds to that holder’s account within the U.S., which application shall remain in effect until the holder notifies the registrar to the contrary in writing.

A holder of debentures may transfer or exchange debentures at the office of the registrar in accordance with the indenture. The registrar and the trustee may require a holder, among other things, to furnish appropriate endorsements and transfer documents, including signature guarantees. No service charge will be imposed by us, the trustee or the registrar for any registration of transfer or exchange of debentures, but we may require a holder to pay a sum sufficient to cover any transfer tax or other similar governmental charge required by law or permitted by the indenture. You may not sell or otherwise transfer debentures or common stock issued upon conversion of debentures except in compliance with the provisions set forth below under “Transfer restrictions” and “—Registration rights.” In addition, we are not required to transfer or exchange any debenture (i) during the 15-day period prior to the mailing of a notice of redemption or (ii) that has been selected for redemption or surrendered for conversion, except for the unredeemed or unconverted portion of any debentures being redeemed or converted in part.

The registered holder of a debenture will be treated as the owner of it for all purposes.

 

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Interest

General

The debentures will bear ordinary interest from August 20, 2007 at a rate of 3.25% per year. We will also pay contingent interest (as defined below) on the debentures in the circumstances described under “—Contingent interest.” Subject to the provisions set forth under “—Option to extend interest payment period,” we will pay interest semi-annually in arrears on February 15 and August 15 of each year to the holders of record at the close of business on the preceding February 1 and August 1 (each such date, in respect of the debentures, a “record date”), respectively, beginning February 15, 2008; provided that:

 

•

we will not pay accrued and unpaid interest on any debentures that are converted into our common stock. See “—Conversion rights.” If a holder of debentures converts after a record date for an interest payment but prior to the corresponding interest payment date, the holder on the record date will receive the interest payable on the interest payment date, notwithstanding the conversion of such debentures prior to such interest payment date, because that holder will have been the holder of record on the corresponding record date. However, at the time the holder surrenders those debentures for conversion, except as provided below, it must pay us an amount equal to the interest that will be paid on the related interest payment date. The preceding sentence does not apply, however, to (i) a holder that converts debentures that have been called by us for redemption and in respect of which we have specified a redemption date that is after a record date but on or prior to the corresponding interest payment date, (ii) a holder that converts debentures in respect of which we have specified a fundamental change repurchase date (as defined below) that is after a record date but on or prior to the corresponding interest payment date or (iii) a holder that converts debentures following the record date for the interest payment due on August 15, 2037. Accordingly, a holder of debentures who chooses to convert its debentures under any of the circumstances described in clauses (i), (ii) or (iii) above will not be required to pay us, at the time it surrenders the debentures for conversion, the amount of interest on the debentures that it would have received on the interest payment date if the debentures had not been called for redemption, repurchased by us or converted, as applicable. In addition, a holder that surrenders debentures for conversion will not be required to pay us any deferred interest, compounded interest or overdue interest that exists at the time of the conversion, regardless of whether such conversion occurs during the period between a record date for an interest payment and the corresponding interest payment date;

 

•

we will pay interest to a person other than the holder of record on the record date for an interest payment if we redeem the debentures on a date that is after the record date and prior to such interest payment date. In this instance, we will pay accrued and unpaid interest on the debentures being redeemed, to but not including the redemption date, to the same person to whom we will pay the principal of such debentures;

 

•

the record and payment dates for a contingent interest payment relating to an extraordinary dividend (as defined below) will be set by our board of directors in connection with the declaration of such dividend, and may not correspond to the semi-annual record and payment dates described above. However, the record date for the payment of such interest to holders of the debentures will be the same as the record date for the payment of the corresponding extraordinary dividend to holders of our common stock; and

 

•

our delivery to a holder of the cash and/or shares of our common stock, together with any cash payment for any fractional share, into which a debenture is convertible, will be deemed to satisfy our obligation to pay accrued and unpaid interest attributable to the period from the issue date through the conversion date. As a result, we will treat such interest as paid in full upon settlement rather than cancelled, extinguished or forfeited.

Interest on the debentures will be computed on the basis of a 360-day year composed of twelve 30-day months.

 

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If any interest payment date (other than an interest payment date coinciding with the stated maturity date or earlier required repurchase date upon a fundamental change) of a debenture falls on a day that is not a business day, such interest payment date will be postponed to the next succeeding business day. If the stated maturity date or earlier required repurchase date upon a fundamental change would fall on a day that is not a business day, the required payment of interest, if any, and principal will be made on the next succeeding business day and no interest on such payment will accrue for the period from and after the stated maturity date or earlier required repurchase date upon a fundamental change to such next succeeding business day. The term “business day” means, with respect to any debenture, any day other than a Saturday, a Sunday or a day on which the Federal Reserve Bank of New York is closed.

Contingent interest

Subject to the accrual, record date and payment provisions described above, beginning with the semi-annual interest period commencing on August 15, 2014, contingent interest (“contingent interest”) will accrue:

 

•

during any semi-annual ordinary interest period where the average trading price of the debentures (as determined below) for the 10 trading days immediately preceding the first day of such semiannual period is greater than or equal to the upside trigger (as defined below), in which case such contingent interest will be payable at a rate per annum equal to 0.50% of such average trading price; and

 

•

during any semi-annual ordinary interest period where the average trading price of the debentures for the 10 trading days immediately preceding the first day of such semi-annual period is less than or equal to the downside trigger (as defined below), in which case such contingent interest will be payable at a rate per annum equal to 0.25% of such average trading price.

In addition, we will pay contingent interest at any time the debentures are outstanding upon the declaration by our board of directors of an extraordinary cash dividend or distribution to all or substantially all holders of our common stock that our board of directors designates as payable with respect to the debentures (an “extraordinary dividend”), in which case such contingent interest will be payable on the same date as, and in an amount equal to, the dividend or distribution that a holder of debentures would have received had such holder converted its debentures immediately prior to the record date for the payment of such dividend or distribution to holders of our common stock (calculated as if such debentures had been converted entirely into shares of our common stock). The record date for the payment of such interest to holders of the debentures will also be the same as the record date for the payment of the corresponding extraordinary dividend to holders of our common stock.

“Upside trigger” means $1,500 per $1,000 principal amount of debentures.

“Downside trigger” means $500 per $1,000 principal amount of debentures during the period prior to August 15, 2021. Beginning on August 15, 2021 and ending on August 15, 2035, the downside trigger will increase in increments of $15 per $1,000 principal amount of debentures per semiannual ordinary interest period on February 15 and August 15 of each year within such period. After August 15, 2035, the downside trigger will remain at $950 per $1,000 principal amount of debentures. For example, the downside trigger will be $605 per $1,000 principal amount of debentures during the period commencing on August 15, 2024 and ending on February 14, 2025.

We will notify the trustee upon a determination that contingent interest on the debentures will accrue during a relevant semi-annual period or upon declaration by our board of directors of an extraordinary dividend that our board of directors designates as payable with respect to the debentures.

The “trading price” of the debentures on any date of determination means the average of the secondary market bid quotations per $1,000 principal amount of debentures obtained by the bid solicitation agent for $5,000,000 principal amount of debentures at approximately 3:30 p.m., New York City time, on such determination date from three independent nationally recognized securities dealers we select; provided that if at

 

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least three such bids cannot reasonably be obtained by the bid solicitation agent but two such bids are obtained, then the average of the two bids shall be used, and if only one such bid can reasonably be obtained by the bid solicitation agent, that one bid shall be used. We will provide prompt written notice to the bid solicitation agent identifying the three independent nationally recognized securities dealers selected by us.

For the purpose of the foregoing contingent interest provisions, if the bid solicitation agent cannot reasonably obtain at least one bid for $5,000,000 principal amount of debentures from an independent nationally recognized securities dealer selected by us or, in the reasonable judgment or our board of directors (acting through the board or a committee thereof), the bid quotations are not indicative of the secondary market value of the debentures, then the trading price per $1,000 principal amount of debentures will be determined by our board of directors (acting through the board or a committee thereof) based on a good faith estimate of the fair value of the debentures; provided that the bid solicitation agent shall not determine the trading price of the debentures unless requested by us to do so; and provided, further, that we shall have no obligation to make such request unless a holder of debentures provides us with reasonable evidence that the trading price of the debentures is greater than or equal to the upside trigger or is less than or equal to the downside trigger, at which time we will instruct the bid solicitation agent to determine the trading price of the debentures in the manner described herein beginning on the next trading day and on each successive trading day until the trading price of the debentures is less than or equal to the upside trigger or is greater than or equal to the downside trigger, as applicable. The bid solicitation agent shall be entitled to all of the rights of the bid solicitation agent set forth in the indenture in connection with any such determination, and any such determination shall be conclusive absent manifest error.

Option to extend interest payment period

So long as we are not in default in the payment of interest on the debentures, we will have the right to extend the interest payment period (such extended period, an “extension period”), including the period for payment of any contingent interest other than extraordinary dividends and additional interest (together with the interest regularly payable on the debentures, “deferred interest”), from time to time for a period not exceeding 10 consecutive semi-annual interest periods, provided that such extension period shall terminate upon the occurrence of a default or event of default, or upon notice given by us in accordance with the provisions of the indenture, and provided further that no extension period shall extend beyond the maturity date of the debentures. We have no current intention of exercising our right to extend an interest payment period. No deferred interest will be due and payable during an extension period, except at the end thereof, but deferred interest will continue to accrue and all such accrued and unpaid deferred interest will itself bear interest at the comparable yield rate (as defined below), compounded semi-annually (“compounded interest”). During any extension period, we will not (i) declare or pay any dividends on, or redeem, purchase, acquire or make a distribution or liquidation payment with respect to, any of our common stock or preferred stock, or make any guarantee payments with respect thereto (provided that the foregoing will not apply (a) to repurchases, redemptions or other acquisitions of shares of our capital stock in connection with any employment contract, benefit plan or other similar arrangement with or for the benefit of employees, officers, directors or consultants, which contract, plan or arrangement is approved by our board of directors, (b) as a result of an exchange or conversion of any class or series of our capital stock for any other class or series of our capital stock, (c) to the purchase of fractional interests in shares of our capital stock pursuant to the conversion or exchange provisions of such capital stock or the security being converted or exchanged or (d) to stock dividends or other stock distributions (including rights, warrants or options to purchase capital stock) paid by us) or (ii) make any payment of principal, interest or premium, if any, on or repay, repurchase or redeem any of our debt securities that rank in right of payment pari passu with, or junior to, the debentures. In addition, we may not redeem the debentures at our option or give notice of a redemption at our option during an extension period or while there is any accrued and unpaid deferred interest with respect to the debentures. Prior to the termination of any extension period, we may further extend the interest payment period; provided that such extension period will be subject to the limitations described above and, together with all such previous and further extensions thereof, may not exceed 10 consecutive semi-annual interest payment periods or extend beyond the maturity of the debentures.

 

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On the first interest payment date occurring on or after the end of each extension period, we will pay to the holders of debentures of record on the record date for such interest payment date, regardless of who the holders of record may have been on other dates during the extension period, all accrued and unpaid deferred interest on the debentures, including compounded interest. Upon the termination of any extension period and the payment of all amounts then due, we may commence a new extension period, subject to the above requirements. We may also prepay at any time, in accordance with the notice provisions contained in the indenture, all or any portion of the deferred interest accrued during an extension period. Consequently, there could be multiple extension periods of varying lengths throughout the term of the debentures, not to exceed 10 consecutive semi-annual interest payment periods; provided, that no such period may extend beyond the stated maturity of the debentures. The failure by us to make deferred interest payments during an extension period will not constitute a default or an event of default under the indenture or our currently outstanding indebtedness.

“Comparable yield rate” means the annual interest rate that VeriSign would pay, as of the initial issue date of the debentures, on a fixed-rate nonconvertible debt security with no contingent payments, but with terms and conditions otherwise comparable to those of the debentures. We expect that the comparable yield rate for the debentures will be an annual rate of 8.5%, compounded semi-annually.

Our settlement of conversions during an extension period will be deemed to satisfy our obligation to pay the principal amount of the debenture and accrued and unpaid interest to, but not including, the conversion date. As a result, accrued and unpaid interest to, but not including, the conversion date will be deemed to be paid in full rather than cancelled, extinguished or forfeited.

We will give notice to the trustee of our election of such extension period at least sixteen calendar days prior to the earlier of (i) the next succeeding interest payment date or (ii) the date we are required to give notice to The Nasdaq Global Select Market (if the debentures are then listed thereon) or other applicable self-regulatory organization or to holders of the debentures of the record or payment date of such related interest payment.

Subordination

The payment of the principal, any premium and interest on the debentures, including amounts payable on any redemption or repurchase, will be subordinated to the prior payment in full of all of our senior debt. The debentures are also effectively subordinated to any debt or other liabilities of our subsidiaries.

As of June 30, 2007, we did not have any senior debt outstanding, and our subsidiaries had approximately $198.7 million of outstanding indebtedness and other liabilities (excluding deferred revenue, intercompany liabilities and liabilities of a type not required to be reflected on the balance sheet of such subsidiaries in accordance with generally accepted accounting principles). We currently have a $500 million revolving credit facility. To the extent we make any borrowings under this facility, these amounts would constitute senior debt.

“Senior debt” is defined in the indenture to mean the principal of (and premium, if any) and interest (including all interest accruing subsequent to the commencement of any bankruptcy or similar proceeding, whether or not a claim for post-petition interest is allowable as a claim in any such proceeding) on, and all fees and other amounts payable in connection with, the following, whether absolute or contingent, secured or unsecured, due or to become due, outstanding on the date of the indenture or thereafter created, incurred or assumed:

 

•

our indebtedness evidenced by a credit or loan agreement, note, bond, debenture or other written obligation;

 

•

all of our obligations for money borrowed;

 

•

all of our obligations evidenced by a note or similar instrument;

 

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•

our obligations (i) as lessee under leases required to be capitalized on the balance sheet of the lessee under generally accepted accounting principles or (ii) as lessee under other leases for facilities, capital equipment or related assets, whether or not capitalized, entered into or leased for financing purposes;

 

•

all of our obligations under swaps, caps, floors, collars, hedge agreements, forward contracts or similar agreements or arrangements;

 

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all of our obligations with respect to letters of credit, bankers’ acceptances and similar facilities (including reimbursement obligations with respect to the foregoing);

 

•

all of our obligations issued or assumed as the deferred purchase price of property or services (but excluding trade accounts payable arising in the ordinary course of business);

 

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all obligations of the type referred to in the above clauses of another person and all dividends of another person, the payment of which, in either case, we have assumed or guaranteed, or for which we are responsible or liable, directly or indirectly, jointly or severally, as obligor, guarantor or otherwise, or which are secured by a lien on our property; and

 

•

renewals, extensions, modifications, replacements, restatements and refundings of, or any indebtedness or obligation issued in exchange for, any such indebtedness or obligation described in the above clauses of this definition.

Senior debt will not include (i) the debentures, (ii) any other indebtedness or obligation if its terms or the terms of the instrument under which or pursuant to which it is issued expressly provide that it is not senior in right of payment to the debentures, (iii) any indebtedness or obligation of ours to any of our subsidiaries or (iv) trade payables.

We may not make any payment on account of principal, premium or interest on the debentures, or redeem or repurchase the debentures, if either of the following occurs:

 

•

we default in our obligations to pay principal, premium, interest or other amounts on our senior debt, including a default under any redemption or repurchase obligation, and the default continues beyond any grace period that we may have to make those payments; or

 

•

any other default occurs and is continuing on any designated senior debt (a “nonpayment default”) and (i) the default permits the holders of the designated senior debt to accelerate its maturity and (ii) the trustee has received a notice (a “payment blockage notice”) of the default from us, the holder of such debt or such other person permitted to give such notice under the indenture.

If payments on the debentures have been blocked by a payment default on senior debt, payments on the debentures may resume when the payment default has been cured or waived or ceases to exist. If payments on the debentures have been blocked by a nonpayment default, payments on the debentures may resume on the earlier of (i) the date the nonpayment default is cured or waived or ceases to exist and (ii) 179 days after the payment blockage notice is received.

No nonpayment default that existed on the day a payment blockage notice was delivered to the trustee can be used as the basis for any subsequent payment blockage notice. In addition, once a holder of designated senior debt has blocked payment on the debentures by giving a payment blockage notice, no new period of payment blockage can be commenced pursuant to a subsequent payment blockage notice until both of the following are satisfied:

 

•

365 days have elapsed since the effectiveness of the immediately prior payment blockage notice; and

 

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all scheduled payments of principal, any premium and interest with respect to the debentures that have come due have been paid in full in cash.

 

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“Designated senior debt” means our obligations under any particular senior debt in which the instrument creating or evidencing the same or the assumption or guarantee thereof (or related agreements or documents to which we are a party) expressly provides that such indebtedness shall be “designated senior debt” for purposes of the indenture. The instrument, agreement or other document evidencing any designated senior debt may place limitations and conditions on the right of such senior debt to exercise the rights of designated senior debt.

Upon any acceleration of the principal due on the debentures as a result of an event of default or payment or distribution of our assets to creditors upon any dissolution, winding up, liquidation or reorganization, whether voluntary or involuntary, marshaling of assets, assignment for the benefit of creditors, or in bankruptcy, insolvency, receivership or other similar proceedings, all principal, premium, if any, interest and other amounts due on all senior debt must be paid in full before you are entitled to receive any payment with respect to the debentures. See “Events of default.” By reason of such subordination, in the event of insolvency, our creditors who are holders of senior debt are likely to recover more, ratably, than you will recover, and you will likely experience a reduction or elimination of payments on the debentures.

In addition to the contractual subordination provisions described above, the debentures will also be “structurally subordinated” to all indebtedness and other liabilities, including trade payables and lease obligations, of our subsidiaries. This occurs because any right of VeriSign to receive any assets of its subsidiaries upon their liquidation or reorganization, and the right of the holders of the debentures to participate in those assets, will be effectively subordinated to the claims of that subsidiary’s creditors, including trade creditors, except to the extent that VeriSign itself is recognized as a creditor of such subsidiary, in which case the claims of VeriSign would still be subordinate to any security interest in the assets of the subsidiary and any indebtedness of the subsidiary senior to that held by VeriSign. The ability of our subsidiaries to pay dividends and make other payments to us is also restricted by, among other things, applicable corporate and other laws and regulations as well as agreements to which our subsidiaries are or may become a party.

The indenture does not limit our ability to incur senior debt or our ability or the ability of our subsidiaries to incur any other indebtedness or liabilities.

We may not be able to comply with the provision of the debentures that provides that upon a fundamental change each holder may require us to repurchase all or a portion of the debentures. In addition, we advise you that there may not be sufficient assets remaining to pay amounts due on the debentures then outstanding in the event of our bankruptcy, liquidation, reorganization or other winding up.

Optional redemption

No sinking fund is provided for the debentures. Prior to August 15, 2017, the debentures will not be redeemable. On or after August 15, 2017 and prior to the maturity date, we may redeem for cash all or part of the debentures if the last reported sale price of our common stock has been at least 150% of the conversion price then in effect for at least 20 trading days during any 30 consecutive trading day period prior to the date on which we provide notice of redemption. The redemption price will equal 100% of the principal amount of the debentures being redeemed, plus accrued and unpaid interest to but excluding the redemption date.

The “last reported sale price” of our common stock on any date means the closing sale price per share (or if no closing sale price is reported, the average of the bid and ask prices or, if more than one in either case, the average of the average bid and the average asked prices) on that date as reported in composite transactions for the principal U.S. national or regional securities exchange on which our common stock is listed for trading. If our common stock is not listed for trading on a U.S. national or regional securities exchange on the relevant date, the “last reported sale price” will be the last quoted bid price for our common stock in the over-the-counter market on the relevant date as reported by the National Quotation Bureau or similar organization. If our common stock is not so quoted, the “last reported sale price” will be the average of the mid-point of the last bid and ask prices for our common stock on the relevant date from each of at least three nationally recognized independent investment banking firms selected by us for this purpose.

 

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We will give notice of redemption not less than 45 nor more than 75 days before the redemption date by mail to the trustee, the paying agent and each holder of debentures. However, we may not redeem the debentures at our option or give notice of redemption during an extension period or while there is any accrued and unpaid deferred interest with respect to the debentures.

If debentures are redeemed on a date that is after a record date for an interest payment and prior to the corresponding interest payment date, we will pay accrued and unpaid interest to the same person to whom we pay the principal of the debentures being redeemed rather than to the holder of record on the record date. If debentures are redeemed on any interest payment date, accrued and unpaid interest will be payable to holders of record on the relevant record date.

We may not redeem any debentures unless all accrued and unpaid interest thereon has been or is simultaneously paid for all semi-annual periods or portions thereof terminating prior to the redemption date.

If we decide to redeem fewer than all of the outstanding debentures, the trustee will select the debentures to be redeemed (in principal amounts of $1,000 or integral multiples thereof) by lot, or on a pro rata basis or by another method the trustee considers fair and appropriate.

If the trustee selects a portion of your debentures for partial redemption and you convert a portion of your debentures, the converted portion will be deemed to be from the portion selected for redemption.

In the event of any redemption, we will not be required to

 

•

issue, register the transfer of or exchange any debentures during the 15-day period prior to the date on which a notice of redemption is deemed to have been given to all holders of debentures to be redeemed; or

 

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register the transfer of or exchange any debentures so selected for redemption, in whole or in part, except the unredeemed portion of any debentures being redeemed in part.

Conversion rights

General

Prior to May 15, 2037, the debentures will be convertible only upon satisfaction of one or more of the conditions described under the headings “—Conversion upon satisfaction of sale price condition,” “—Conversion upon satisfaction of trading price condition,” “—Conversion upon notice of redemption,” and “—Conversion upon specified corporate transactions.” On or after May 15, 2037, holders may convert their debentures at the applicable conversion rate at any time prior to the close of business on the business day immediately preceding the maturity date. The initial conversion rate will be 29.0968 shares of common stock per $1,000 principal amount of debentures (equivalent to a conversion price of approximately $34.37 per share of common stock) and will be subject to adjustment as provided below. Upon conversion of debentures, we will satisfy our conversion obligation by delivering cash, shares of our common stock or any combination thereof, at our option, all as set forth below under “—Payment upon conversion.” The trustee will initially act as the conversion agent.

The conversion rate and the equivalent conversion price in effect at any given time are referred to as the “applicable conversion rate” and the “applicable conversion price,” respectively, and will be subject to adjustment as described below. A holder may convert fewer than all of such holder’s debentures so long as the debentures converted are a multiple of $1,000 principal amount.

If we call debentures for redemption, a holder of debentures may convert debentures only until the close of business on the trading day immediately preceding the redemption date unless we fail to pay the redemption price. If a holder of debentures has submitted debentures for repurchase upon a fundamental change, the holder may convert those debentures only if it withdraws its repurchase election.

 

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Upon conversion, you will not receive any separate cash payment for accrued and unpaid interest unless such conversion occurs between a record date and the interest payment date to which it relates and you were the holder of record on such record date. We will not issue fractional shares of our common stock upon conversion of debentures. Instead, we will pay cash in lieu of fractional shares based on the daily VWAP (as defined under “—Payment upon conversion”) of our common stock on the last day of the observation period (as defined under “—Payment upon conversion”). Our delivery to you of the cash and/or shares of our common stock, together with any cash payment for any fractional share, into which a debenture is convertible, will be deemed to satisfy in full our obligation to pay:

 

•

the principal amount of the debenture; and

 

•

accrued and unpaid interest to, but not including, the conversion date.

As a result, accrued and unpaid interest to, but not including, the conversion date will be deemed to be paid in full rather than cancelled, extinguished or forfeited.

Notwithstanding the preceding paragraph, if debentures are converted after 5:00 p.m., New York City time, on a record date for the payment of interest, holders of such debentures at 5:00 p.m., New York City time, on such record date will receive the interest payable on such debentures on the corresponding interest payment date notwithstanding the conversion. Debentures, upon surrender for conversion during the period from 5:00 p.m., New York City time, on any record date to 9:00 a.m., New York City time, on the immediately following interest payment date, must be accompanied by funds equal to the amount of interest payable on the debentures so converted; provided that no such payment need be made:

 

•

if we have specified a redemption date that is after a record date and on or prior to the corresponding interest payment date;

 

•

if we have specified a fundamental change repurchase date that is after a record date and on or prior to the corresponding interest payment date;

 

•

in respect of any conversion that occurs after the record date for the interest payment due on August 15, 2037; or

 

•

to the extent of any deferred interest, compounded interest or overdue interest, if any such amounts exist at the time of conversion with respect to such debenture.

If a holder converts debentures, we will pay any documentary, stamp or similar issue or transfer tax due on the issue of any shares of our common stock upon the conversion, unless the tax is due because the holder requests any shares to be issued in a name other than the holder’s name, or the tax is imposed by any taxing authority outside the United States, in which case the holder will pay that tax.

Prior to May 15, 2037, holders may surrender their debentures for conversion only under the following circumstances:

Conversion upon satisfaction of sale price condition

A holder may surrender all or a portion of its debentures for conversion during any fiscal quarter (and only during such fiscal quarter) commencing after December 31, 2007, if the last reported sale price of the common stock for at least 20 trading days during the period of 30 consecutive trading days ending on the last trading day of the preceding fiscal quarter is greater than or equal to 130% of the applicable conversion price on such last trading day.

For purposes of the foregoing and the immediately following contingent conversion provisions, “trading day” means a day during which (i) trading in our common stock generally occurs on the principal U.S. national or regional securities exchange or market on which our common stock is listed or admitted for trading, (ii) there

 

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is no market disruption event and (iii) a last reported sale price is available on the principal U.S. national or regional securities exchange or market on which our common stock is listed or admitted for trading. If our common stock (or other security for which a last reported sale price must be determined) is not so listed or admitted for trading, “trading day” means a business day.

“Market disruption event” means, if our common stock is listed on a U.S. national or regional securities exchange, the occurrence or existence during the one-half hour period ending on the scheduled close of trading on any trading day for our common stock of any material suspension or limitation imposed on trading (by reason of movements in price exceeding limits permitted by the stock exchange or otherwise) in our common stock or in any options, contracts or future contracts relating to our common stock.

Conversion upon satisfaction of trading price condition

A holder of debentures may surrender its debentures for conversion during the five business day period after any 10 consecutive trading day period (the “measurement period”) in which the trading price per $1,000 principal amount of debentures, as determined following a request by a holder of debentures in accordance with the procedures described below, for each day of that period was less than 98% of the product of the last reported sale price of our common stock and the applicable conversion rate.

For the purposes of the foregoing and immediately following conversion provisions, if the bid solicitation agent cannot reasonably obtain at least one bid for $5,000,000 principal amount of the debentures from an independent nationally recognized securities dealer as required by the trading price definition above, then the trading price per $1,000 principal amount of debentures will be deemed to be less than 98% of the product of the last reported sale price of our common stock and the applicable conversion rate. If we do not instruct the bid solicitation agent to obtain bids when required, the trading price per $1,000 principal amount of the debentures will be deemed to be less than 98% of the product of the last reported sale price on each day that we fail to do so.

In connection with any conversion upon satisfaction of the above trading price condition, the bid solicitation agent will have no obligation to determine the trading price of the debentures unless we have requested such determination; and we will have no obligation to make such request unless a holder of a debenture provides us with reasonable evidence that the trading price per $1,000 principal amount of debentures would be less than 98% of the product of the last reported sale price of our common stock and the applicable conversion rate. At such time, we will instruct the bid solicitation agent to determine the trading price of the debentures beginning on the next trading day and on each successive trading day until the trading price per $1,000 principal amount of debentures is greater than or equal to 98% of the product of the last reported sale price of our common stock and applicable conversion rate. If the trading price condition has been met, we will so notify the holders. If at any time after the trading price condition has been met, the trading price per $1,000 principal amount of debentures is greater than 98% of the product of the last reported sale price of our common stock and the conversion rate for such date, we will also so notify the holders.

Conversion upon notice of redemption

If we call any or all of the debentures for redemption, holders may convert debentures that have been so called for redemption at any time prior to the close of business on the trading day immediately preceding the redemption date, even if the debentures are not otherwise convertible at such time, after which time the holder’s right to convert will expire unless we default in the payment of the redemption price.

 

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Conversion upon specified corporate transactions

Certain distributions

If we elect to:

 

•

distribute to all or substantially all holders of our common stock certain rights entitling them to purchase, for a period expiring within 60 days after the date of the distribution, shares of our common stock at less than the average of the last reported sale prices of a share of our common stock for the 10 consecutive trading day period ending on the trading day preceding the announcement of such issuance; or

 

•

distribute to all or substantially all holders of our common stock our assets, debt securities or certain rights to purchase our securities, which distribution has a per share value, as determined by our board of directors in good faith, exceeding 10% of the last reported sale price of our common stock on the trading day immediately preceding the declaration date for such distribution, we must notify the holders of the debentures at least 25 scheduled trading days prior to the ex date for such distribution. Once we have given such notice, holders may surrender their debentures for conversion at any time until the earlier of 5:00 p.m., New York City time, on the business day immediately prior to the ex date or our announcement that such distribution will not take place, even if the debentures are not otherwise convertible at such time. The “ex date” means the first date on which shares of our common stock trade on the applicable exchange or in the applicable market, regular way, without the right to receive the issuance, dividend or distribution in question.

Fundamental changes

If we are party to a transaction described in clause (2) of the definition of fundamental change (without giving effect to the exception regarding publicly traded securities contained in the paragraph immediately following that definition), we must notify holders of the debentures at least 35 scheduled trading days prior to the anticipated effective date for such transaction. Once we have given such notice, holders may surrender their debentures for conversion at any time until 35 calendar days after the actual effective date of such transaction (or if such transaction also constitutes a fundamental change, the related fundamental change repurchase date). In addition, holders may surrender all or a portion of their debentures for conversion if a fundamental change of the type described in clauses (1), (3) or (4) of the definition of fundamental change occurs. In such event, holders may surrender debentures for conversion at any time beginning on the actual effective date of such fundamental change until and including the date that is 35 calendar days after the actual effective date of such transaction or, if earlier, until the repurchase date corresponding to such fundamental change.

Conversion procedures

If you hold a beneficial interest in a global debenture, to convert you must comply with DTC’s procedures for converting a beneficial interest in a global debenture and, if required, pay funds equal to interest payable on the next interest payment date and all transfer and similar taxes that may be applicable to such conversion.

If you hold a certificated debenture, to convert you must:

 

•

complete and manually sign the conversion notice on the back of the debenture, or a facsimile of the conversion notice;

 

•

deliver the conversion notice, which is irrevocable, and the debenture to the conversion agent;

 

•

if required, furnish appropriate endorsements and transfer documents;

 

•

if required, pay all transfer or similar taxes that may be applicable to such conversion; and

 

•

if required, pay funds equal to interest payable on the next interest payment date.

 

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The date you comply with these requirements is the “conversion date” under the indenture.

If a holder has already delivered a repurchase notice as described under “Fundamental change permits holders to require us to repurchase debentures” with respect to a debenture, the holder may not surrender that debenture for conversion until the holder has withdrawn the repurchase notice in accordance with the indenture.

Payment upon conversion

Upon conversion, we may choose to deliver either cash, shares of our common stock or a combination of cash and shares of our common stock, as described below.

All conversions after May 15, 2037 will be settled in the same relative proportions of cash and/or shares of our common stock, which we refer to as the “settlement method.” If we have not delivered a notice of our election of settlement method prior to May 15, 2037, the “net share settlement” method will apply as described below.

Prior to May 15, 2037, we will use the same settlement method for all conversions occurring on any given trading day. Except for any conversions that occur either (i) during the period between a redemption notice and the related redemption date or (ii) on or after May 15, 2037, however, we will not have any obligation to use the same settlement method with respect to conversions that occur on different trading days. That is, we may choose on one trading day to settle conversions in shares of our common stock only, and choose on another trading to day to settle in cash or a combination of cash and shares of our common stock. If we elect to do so, we will inform holders so converting through the trustee of the settlement method we choose we have selected no later than the second trading day immediately following the related conversion date. If we do not make such an election, the “net share settlement” method will apply as described below.

Settlement amounts will be computed as follows:

 

•

if we elect to satisfy our conversion obligation solely in shares of common stock, we will deliver a number of shares of common stock equal to (1) the aggregate principal amount of debentures to be converted divided by $1,000, multiplied by (2) the applicable conversion rate;

 

•

if we elect to satisfy our conversion obligation solely in cash, we will deliver to the electing holder cash in an amount equal to the sum of the daily conversion values for each of the 30 trading days during the related observation period; and

 

•

if we elect to satisfy our conversion obligation through delivery of a combination of cash and common stock, we will deliver to holders in respect of each $1,000 principal amount of debentures being converted a “settlement amount” equal to the sum of the daily settlement amounts for each of the 30 trading days during the observation period.

The “daily settlement amount,” for each of the 30 trading days during the observation period, will consist of

 

•

cash equal to the lesser of (i) the dollar amount per debenture specified in the notice regarding our chosen settlement method (the “specified dollar amount”), if any, divided by 30 (such quotient being referred to as the “daily measurement value”) and (ii) the daily conversion value; and

 

•

to the extent the daily conversion value exceeds the daily measurement value, a number of shares (the “daily share amount”) equal to (i) the difference between the daily conversion value and the daily measurement value, divided by (ii) the daily VWAP for such day.

For the purposes of a “net share settlement,” the specified dollar amount will be $1,000.

“Daily conversion value” means, for each of the 30 consecutive trading days during the observation period, one-thirtieth (1/30) of the product of (i) the applicable conversion rate and (ii) the daily VWAP of our common stock on such day.

 

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“Daily VWAP” means, for each of the 30 consecutive trading days during the observation period, the per share volume-weighted average price as displayed under the heading “Bloomberg VWAP” on Bloomberg page “VRSN.UQ <equity> AQR” (or its equivalent successor if such page is not available) in respect of the period from 9:30 a.m. to 4:00 p.m., New York City time, on such trading day (or if such volume-weighted average price is unavailable, the market value of one share of our common stock on such trading day determined, using a volume-weighted average method, by a nationally recognized independent investment banking firm retained for this purpose by us), provided that after consummation of a fundamental change in which the consideration is comprised entirely of cash, the daily VWAP will be deemed to be the cash price per share received by holders of our common stock in such fundamental change.

“Observation period” with respect to any debenture means the 30 consecutive trading day period beginning on and including the fourth trading day after the related conversion date, except that (i) with respect to any conversion date occurring after the date of issuance of a notice of redemption as described under “—Optional redemption,” the “observation period” means the 30 consecutive trading days beginning on and including the 32nd scheduled trading day prior to the applicable redemption date and (ii) with respect to any conversion date occurring during the period beginning on May 15, 2037, and ending at 5:00 p.m., New York City time, on the scheduled trading day immediately prior to maturity, “observation period” means the first 30 trading days beginning on and including the 32nd scheduled trading day prior to maturity.

For the purposes of determining payment upon conversion, “trading day” means a day during which (i) trading in our common stock generally occurs on the principal U.S. national or regional securities exchange or market on which our common stock is listed or admitted for trading and (ii) there is no market disruption event.

“Scheduled trading day” means a day that is scheduled to be a trading day on the principal U.S. national or regional securities exchange or market on which our common stock is listed or admitted for trading.

Except as may be necessary to take account of certain adjustments to the conversion rate, we will deliver the cash and/or shares of our common stock due in respect of conversion on the third business day immediately following the relevant conversion date, if we elect to satisfy our conversion obligation solely in shares of common stock, and by the third business day immediately following the last day of the observation period, in the case of any other settlement method.

We will deliver cash in lieu of any fractional share of common stock issuable in connection with payment of the settlement amount (based on the daily VWAP for the final trading day of the applicable observation period).

Exchange in lieu of conversion

When a holder surrenders debentures for conversion, we may direct the conversion agent to surrender, on or prior to the commencement of the applicable observation period, such debentures to a financial institution designated by us for exchange in lieu of conversion. In order to accept any debentures surrendered for conversion, the designated institution must agree to deliver, in exchange for such debentures, all cash and/or shares of our common stock due upon conversion, all as provided above under “—Payment upon conversion,” at the sole option of the designated financial institution and as is designated to the conversion agent by us. By the close of business on the second trading day after the applicable conversion date, we will notify the holder surrendering debentures for conversion that we have directed the designated financial institution to make an exchange in lieu of conversion and such financial institution will be required to notify the conversion agent whether it will deliver, upon exchange, the cash and/or shares of common stock due in respect of such conversion.

If the designated institution accepts any such debentures, it will deliver cash and/or shares of our common stock to the conversion agent and the conversion agent will deliver such cash and/or shares of our common stock to such holder on the third business day immediately following the last day of the applicable observation period

 

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or, if such conversion is to be settled solely in shares of our common stock, the third business day following the applicable conversion date. Any debentures exchanged by the designated institution will remain outstanding. If the designated institution agrees to accept any debentures for exchange but does not timely deliver the related consideration, or if such designated financial institution does not accept the debentures for exchange, we will convert the debentures into cash and/or shares of our common stock as described above under “—Conversion rights.”

Our designation of an institution to which the debentures may be submitted for exchange does not require the institution to accept any debentures. We will not pay any consideration to, or otherwise enter into any agreement with, the designated institution for or with respect to such designation.

Conversion rate adjustments

The conversion rate will be adjusted as described below, except that we will not make any adjustments to the conversion rate if holders of the debentures participate, as a result of holding the debentures, in any of the transactions described below without having to convert their debentures.

 

(1)

If we issue shares of our common stock as a dividend or distribution on shares of our common stock and such dividend or distribution consists exclusively of shares of our common stock, or if we effect a share split or share combination, the conversion rate will be adjusted based on the following formula:

 

CR’		=		CR0 X		OS’
						OS0

where,

CR₀ = the conversion rate in effect immediately prior to the ex date of such dividend or distribution, or the effective date of such share split or share combination, as applicable;

CR’ = the conversion rate in effect immediately after such ex date or effective date;

OS₀ = the number of shares of our common stock outstanding immediately prior to such ex date or effective date; and

OS’ = the number of shares of our common stock outstanding immediately prior to such ex date or effective date after giving effect to such dividend, distribution, share split or share combination.

 

(2)

If we distribute to all or substantially all holders of our common stock any rights or warrants or securities convertible into or exchangeable or exercisable for common stock entitling them for a period of not more than 60 calendar days to subscribe for or purchase shares of our common stock, at a price per share less than the average of the last reported sale prices of our common stock for the 10 consecutive trading day period ending on the business day immediately preceding the date of announcement of such issuance, the conversion rate will be adjusted based on the following formula (provided that the conversion rate will be readjusted to the extent that such rights or warrants are not exercised prior to their expiration):

 

CR’		=		CR0 X		OS0 + X
						OS0 + Y

where,

CR₀ = the conversion rate in effect immediately prior to the ex date for such issuance;

CR’ = the conversion rate in effect immediately after such ex date;

OS₀ = the number of shares of our common stock outstanding immediately after such ex date;

 

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X = the total number of shares of our common stock issuable pursuant to such rights, warrants or convertible securities; and

Y = the number of shares of our common stock equal to the aggregate price payable to exercise such rights or warrants divided by the average of the last reported sale prices of our common stock over the 10 consecutive trading day period ending on the trading day immediately preceding the date of announcement of the issuance of such rights, warrants or convertible securities.

 

(3)

If we distribute shares of our capital stock, evidences of our indebtedness or other assets or property of ours to all or substantially all holders of our common stock, excluding:

 

•

dividends or distributions and rights or warrants referred to in clause (1) or (2) above or clause (5) below for which an adjustment is made to the conversion rate;

 

•

dividends or distributions paid exclusively in cash, including as described in clause (4) below; or

 

•

spin-offs described below in this paragraph (3),

then the conversion rate will be adjusted based on the following formula:

 

CR’		=		CR0 X		SP0
						SP0 – FMV

where,

CR₀ = the conversion rate in effect immediately prior to the ex date for such distribution;

CR’ = the conversion rate in effect immediately after such ex date;

SP₀ = the average of the last reported sale prices of our common stock over the 10 consecutive trading day period ending on the trading day immediately preceding the ex date for such distribution; and

FMV = the fair market value (as determined by our board of directors) of the shares of capital stock, evidences of indebtedness, assets or property distributed with respect to each outstanding share of our common stock on the ex date for such distribution.

With respect to an adjustment pursuant to this clause (3) where there has been a payment of a dividend or other distribution on our common stock of shares of capital stock of any class or series, or similar equity interest, of or relating to a subsidiary or other business unit, which we refer to as a “spin-off,” the conversion rate in effect immediately before 5:00 p.m., New York City time, on the effective date of the spin-off will be increased based on the following formula:

 

CR’		=		CR0 X		FMV0 + MP0
						MP0

where,

 

CR₀ = the conversion rate in effect immediately prior to the effective date of the adjustment;

CR’ = the conversion rate in effect immediately after the effective date of the adjustment;

FMV₀ = the average of the last reported sale prices of the capital stock or similar equity interest distributed to holders of our common stock applicable to one share of our common stock over the first 10 consecutive trading day period after, and including, the effective date of the spin-off; and

MP₀ = the average of the last reported sale prices of our common stock over the first 10 consecutive trading day period after, and including, the effective date of the spin-off.

The adjustment to the conversion rate under the preceding paragraph will occur on the tenth trading day from, and including, the effective date of the spin-off; provided that in respect of any conversion within 10 trading days immediately following, and including, the effective date of any spin off, the

 

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conversion rate adjustment on the tenth trading day will apply with settlement of the conversion delayed as necessary to take account of such adjustment.

 

(4)

If any cash dividend or distribution is made to all or substantially all holders of our common stock, other than (i) distributions described in clause (5) below pursuant to which an adjustment to the conversion rate is made or (ii) an extraordinary cash dividend or distribution that our board of directors designates as payable with respect to the debentures, the conversion rate will be adjusted based on the following formula:

 

CR’		=		CR0 X		SP0
						SP0  – C

where,

CR₀ = the conversion rate in effect immediately prior to the ex date for such dividend or distribution;

CR’ = the conversion rate in effect immediately after the ex date for such dividend or distribution;

SP₀ = the last reported sale price of our common stock on the trading day immediately preceding the ex date for such dividend or distribution; and

C = the amount in cash per share we distribute to holders of our common stock.

 

(5)

If we or any of our subsidiaries make a payment in respect of a tender offer or exchange offer for our common stock, to the extent that the cash and value of any other consideration included in the payment per share of common stock exceeds the last reported sale price of our common stock on the trading day next succeeding the last date on which tenders or exchanges may be made pursuant to such tender or exchange offer, the conversion rate will be increased based on the following formula:

 

CR’		=		CR0 X		AC + (SP’ X OS’)
						OS0 X SP’

where,

CR₀ = the conversion rate in effect immediately prior to the effective date of the adjustment;

CR’ = the conversion rate in effect immediately after the effective date of the adjustment;

AC = the aggregate value of all cash and any other consideration (as determined by our board of directors) paid or payable for shares purchased in such tender or exchange offer;

OS₀ = the number of shares of our common stock outstanding immediately prior to the date such tender or exchange offer expires (including any shares purchased pursuant to the tender or exchange offer);

OS’ = the number of shares of our common stock outstanding immediately after the date such tender or exchange offer expires (not including any shares purchased pursuant to the tender or exchange offer); and

SP’ = the average of the last reported sale prices of our common stock over the 10 consecutive trading day period commencing on the trading day next succeeding the date such tender or exchange offer expires.

The adjustment to the conversion rate under the preceding paragraph will occur on the tenth trading day from, and including, the trading day next succeeding the date such tender or exchange offer expires, provided that in respect of any conversion within 10 trading days immediately following, and including, the trading day next succeeding the date such tender or exchange offer expires, the conversion rate adjustment on the tenth trading day will apply with settlement of the conversion delayed as necessary to take account of such adjustment.

Except as stated herein, we will not adjust the conversion rate for the issuance of shares of our common stock or any securities convertible into or exchangeable for shares of our common stock or the right to purchase shares of our common stock or such convertible or exchangeable securities.

 

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Notwithstanding the above, certain listing standards of The Nasdaq Global Select Market may limit the amount by which we may increase the conversion rate pursuant to the events described in clauses (2) through (5) and as described in “—Adjustment to shares delivered upon conversion in connection with certain fundamental changes” below. These standards generally require us to obtain the approval of our stockholders before entering into certain transactions that potentially result in the issuance of 20% or more of our common stock outstanding at the time the debentures are issued unless we obtain stockholder approval of issuances in excess of such limitations. In accordance with these listing standards, these restrictions will apply at any time when the debentures are outstanding, regardless of whether we then have a class of securities listed on The Nasdaq Global Select Market. Accordingly, in the event of an increase in the conversion rate above that which would result in the debentures, in the aggregate, becoming convertible into shares in excess of such limitations, we will either obtain stockholder approval of such issuances or deliver cash in lieu of any shares otherwise deliverable upon conversions in excess of such limitations (based on the last reported sale price of our common stock on the trading day immediately prior to the conversion date).

If application of the foregoing formulas would result in a decrease in the conversion rate, no adjustment to the conversion rate will be made (other than as a result of a share split or share combination).

In addition, in no event will we adjust the conversion rate to the extent that the adjustment would reduce the conversion price below the par value per share of our common stock.

We are permitted, to the extent permitted by law and subject to the applicable rules of The Nasdaq Global Select Market (if we are then listed on The Nasdaq Global Select Market), to increase the conversion rate of the debentures by any amount for a period of at least 20 days if our board of directors determines that such increase would be in our best interest. We may also (but are not required to) increase the conversion rate to avoid or diminish income tax to holders of our common stock or rights to purchase shares of our common stock in connection with a dividend or distribution of shares (or rights to acquire shares) or similar event.

A holder of debentures may, in some circumstances, including the distribution of cash dividends to holders of our shares of common stock, be deemed to have received a distribution or dividend subject to U.S. federal income tax as a result of an adjustment or the nonoccurrence of an adjustment to the conversion rate. For a discussion of the U.S. federal income tax treatment of an adjustment to the conversion rate, see “Certain U.S. federal income tax considerations.”

We currently have a preferred stock rights plan. To the extent that we have a rights plan in effect upon conversion of the debentures into common stock, you will receive, in addition to the common stock, the rights under the rights plan, unless prior to any conversion, the rights have separated from the common stock, in which case, and only in such case, the conversion rate will be adjusted at the time of separation as if we distributed to all holders of our common stock, shares of our capital stock, evidences of indebtedness or assets as described in clause (3) above, subject to readjustment in the event of the expiration, termination or redemption of such rights.

Notwithstanding any of the foregoing, the applicable conversion rate will not be adjusted:

 

•

upon the issuance of any shares of our common stock pursuant to any present or future plan providing for the reinvestment of dividends or interest payable on our securities and the investment of additional optional amounts in shares of our common stock under any plan;

 

•

upon the issuance of any shares of our common stock or options or rights to purchase those shares pursuant to any present or future employee, director or consultant benefit plan or program of or assumed by us or any of our subsidiaries;

 

•

upon the issuance of any shares of our common stock pursuant to any option, warrant, right or exercisable, exchangeable or convertible security not described in the preceding bullet and outstanding as of the date the debentures were first issued;

 

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•

for any dividend or distribution in connection with a merger, sale or conveyance effected solely for the purpose of changing our jurisdiction of incorporation as permitted under the indenture;

 

•

for a change in the par value of our common stock; or

 

•

for accrued and unpaid interest.

We will not be required to make an adjustment in the conversion rate unless the adjustment would require a change of at least 1% in the conversion rate. However, we will carry forward any adjustments that are less than 1% of the conversion rate and take them into account in any subsequent adjustment of the conversion rate or in connection with any conversion of the debentures. Adjustments to the applicable conversion rate will be calculated to the nearest 1/10,000th of a share. Except as described above in this section and as described under “— Adjustment to shares delivered upon conversion in connection with certain fundamental changes,” we will not adjust the conversion rate.

Recapitalizations, reclassifications and changes of our common stock

In the case of any recapitalization, reclassification or change of our common stock (other than changes resulting from a subdivision or combination), a consolidation, merger or combination involving us, a sale, lease or other transfer to a third party of our and our subsidiaries’ consolidated assets substantially as an entirety, or any statutory share exchange, in each case as a result of which our common stock would be converted into, or exchanged for, stock, other securities, other property or assets (including cash or any combination thereof), then, at the effective time of the transaction, the right to convert a debenture will be changed into a right to convert it into the kind and amount of shares of stock, other securities or other property or assets (including cash or any combination thereof) that a holder of a number of shares of common stock equal to the conversion rate immediately prior to such transaction would have owned or been entitled to receive (the “reference property”) upon such transaction. If the transaction causes our common stock to be converted into the right to receive more than a single type of consideration (determined based in part upon any form of stockholder election), the reference property into which the debentures will be convertible will be deemed to be the weighted average of the types and amounts of consideration received by the holders of our common stock that affirmatively make such an election. However, at and after the effective time of the transaction, any amount otherwise payable in cash upon conversion of the debentures will continue to be payable in cash, and the daily conversion value will be calculated based on the value of the reference property. We will agree in the indenture not to become a party to any such transaction unless its terms are consistent with the foregoing.

Adjustments of average prices

Whenever any provision of the indenture requires us to calculate an average of last reported prices or daily VWAP over a span of multiple days, we will make appropriate adjustments to account for any adjustment to the conversion rate that becomes effective, or any event requiring an adjustment to the conversion rate where the ex-date of the event occurs, at any time during the period from which the average is to be calculated.

Adjustment to shares delivered upon conversion in connection with certain fundamental changes

If you elect to convert your debentures at any time from (and including) the effective date of a “make-whole fundamental change” as defined below to (and including) the related fundamental change repurchase date, the conversion rate will be increased by an additional number of shares of common stock (the “additional shares”) as described below. We will notify holders of the anticipated effective date of any make-whole fundamental change and issue a press release as soon as practicable after we first determine the anticipated effective date of such make-whole fundamental change.

A “make-whole fundamental change” means any transaction or event that constitutes a fundamental change pursuant to clauses (1), (2) or (3) under the definition of fundamental change as described under “Fundamental

 

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change permits holders to require us to repurchase debentures” below. The number of additional shares by which the conversion rate will be increased will be determined by reference to the table below, based on the date on which the make-whole fundamental change occurs or becomes effective (the “effective date”) and the price (the “stock price”) paid per share of our common stock in the make-whole fundamental change. If the make-whole fundamental change is a transaction described in clause (2) of the definition thereof, and holders of our common stock receive only cash in that make-whole fundamental change, the stock price will be the cash amount paid per share. Otherwise, the stock price will be the average of the last reported sale prices of our common stock over the five trading day period ending on the trading day preceding the effective date of the make-whole fundamental change.

The stock prices set forth in the column headings of the table below will be adjusted as of any date on which the conversion rate of the debentures is adjusted. The adjusted stock prices will equal the stock prices applicable immediately prior to such adjustment, multiplied by a fraction, the numerator of which is the conversion rate immediately prior to the adjustment giving rise to the stock price adjustment and the denominator of which is the conversion rate as so adjusted. The number of additional shares will be adjusted in the same manner as the conversion rate as set forth under “—Conversion rate adjustments.”

The following table sets forth the hypothetical stock price and the number of additional shares to be received per $1,000 principal amount of debentures:

 

		Stock Price
		$28.64		$33.00		$38.00		$43.00		$48.00		$51.55		$53.00		$58.00		$63.00		$68.00		$73.00		$78.00		$83.00		$88.00		$93.00		$98.00
Effective Date
August 15, 2007		5.8194		5.6277		4.5968		3.7917		3.2052		2.8688		2.7315		2.3561		2.0555		1.7975		1.5766		1.3952		1.2370		1.0958		0.9769		0.8699
August 15, 2008		5.8194		5.4802		4.4113		3.6415		3.0634		2.7414		2.6098		2.2533		1.9574		1.7111		1.5084		1.3298		1.1784		1.0487		0.9336		0.8325
August 15, 2009		5.8194		5.2727		4.2321		3.4662		2.9051		2.6036		2.4805		2.1266		1.8442		1.6166		1.4219		1.2531		1.1109		0.9876		0.8799		0.7850
August 15, 2010		5.8194		5.0488		4.0060		3.2779		2.7276		2.4311		2.3100		1.9838		1.7163		1.5020		1.3179		1.1628		1.0318		0.9173		0.8180		0.7301
August 15, 2011		5.8194		4.7962		3.7708		3.0497		2.5214		2.2381		2.1223		1.8123		1.5653		1.3643		1.1978		1.0577		0.9381		0.8349		0.7450		0.6660
August 15, 2012		5.8194		4.5838		3.5191		2.8020		2.2869		2.0159		1.9052		1.6141		1.3863		1.2037		1.0543		0.9297		0.8242		0.7336		0.6550		0.5860
August 15, 2013		5.8194		4.3029		3.2465		2.5248		2.0180		1.7583		1.6523		1.3810		1.1743		1.0126		0.8828		0.7765		0.6875		0.6119		0.5466		0.4896
August 15, 2014		5.8194		4.0845		2.9768		2.2302		1.7193		1.4667		1.3635		1.1105		0.9259		0.7874		0.6803		0.5952		0.5257		0.4676		0.4180		0.3750
August 15, 2015		5.8194		3.9454		2.7471		1.9371		1.3949		1.1391		1.0346		0.7948		0.6333		0.5218		0.4422		0.3829		0.3368		0.2996		0.2685		0.2417
August 15, 2016		5.8194		3.9651		2.6445		1.7011		1.0571		0.7662		0.6473		0.4050		0.2700		0.1972		0.1570		0.1332		0.1171		0.1049		0.0947		0.0859
August 15, 2017		5.8194		3.9541		2.6154		1.5851		0.8095		0.0000		0.0000		0.0000		0.0000		0.0000		0.0000		0.0000		0.0000		0.0000		0.0000		0.0000
August 15, 2022		5.8194		3.8317		2.4551		1.4151		0.6469		0.0000		0.0000		0.0000		0.0000		0.0000		0.0000		0.0000		0.0000		0.0000		0.0000		0.0000
August 15, 2027		5.8194		3.9361		2.5049		1.4415		0.6528		0.0000		0.0000		0.0000		0.0000		0.0000		0.0000		0.0000		0.0000		0.0000		0.0000		0.0000
August 15, 2032		5.8194		3.9242		2.4333		1.3799		0.6143		0.0000		0.0000		0.0000		0.0000		0.0000		0.0000		0.0000		0.0000		0.0000		0.0000		0.0000
August 15, 2037		0.0000		0.0000		0.0000		0.0000		0.0000		0.0000		0.0000		0.0000		0.0000		0.0000		0.0000		0.0000		0.0000		0.0000		0.0000		0.0000

The exact stock prices and effective dates relating to a fundamental change may not be set forth in the table above, in which case:

 

•

if the stock price is between two stock price amounts in the table or the effective date is between two effective dates in the table, the number of additional shares will be determined by a straight-line

 

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interpolation between the number of additional shares set forth for the higher and lower stock price amounts and the two dates, as applicable, based on a 365-day year;

 

•

if the stock price is greater than $98.00 per share (subject to adjustment), no additional shares will be added to the conversion rate; and

 

•

if the stock price is less than $28.64 per share (subject to adjustment), no additional shares will be added to the conversion rate.

Notwithstanding the foregoing, in no event will the total number of shares of common stock issuable upon conversion exceed 34.9162 shares per $1,000 principal amount of debentures, provided that this limit will be subject to adjustment in the same manner as the conversion rate as set forth under “—Conversion rate adjustments.”

At our option, in lieu of increasing the conversion rate as described in this section in the event of a make-whole fundamental change, we may elect to make a cash payment in respect of the additional shares. Such cash payment to any holder electing to convert its debentures would be equal to the number of additional shares issuable upon conversion determined by reference to the table above multiplied by the effective share price of the transaction which constitutes a make-whole fundamental change. Any such election by us will be disclosed in the notice of the occurrence of the fundamental change that we are required to provide to all record holders of debentures. Once this notice has been provided, we may not modify or withdraw our election.

Our obligation to increase the conversion rate as described above could be considered a penalty, in which case the enforceability thereof would be subject to general principles of economic remedies.

Settlement of conversions in a fundamental change

As described above under “—Recapitalizations, reclassifications and changes of our common stock,” in the case of a fundamental change, upon effectiveness of such fundamental change, the debentures will be convertible into cash and reference property. If, as described above, we are required to increase the conversion rate as a result of the fundamental change, debentures surrendered for conversion will otherwise be settled as described above under “—Payment upon conversion.” The additional shares or cash or reference property will be delivered to holders who elect to convert their debentures in connection with a fundamental change as described above in “—Adjustment to shares delivered upon conversion in connection with certain fundamental changes” on the later of (i) five days after the effectiveness of such fundamental change and (ii) the conversion settlement date for those debentures.

Fundamental change permits holders to require us to repurchase debentures

If a fundamental change (as defined below in this section) occurs at any time, you will have the right, at your option, to require us to repurchase for cash any or all of your debentures, or any portion of the principal amount thereof, that is equal to $1,000 or an integral multiple of $1,000. The price we are required to pay (the “fundamental change repurchase price”) is equal to 100% of the principal amount of the debentures to be repurchased plus accrued and unpaid interest to but excluding the fundamental change repurchase date (unless the fundamental change repurchase date is between a record date and the interest payment date to which it relates, in which case we will pay accrued and unpaid interest to the holder of record on such record date). The “fundamental change repurchase date” will be a business day specified by us that is not less than 20 nor more than 35 calendar days following the date of our fundamental change notice as described below. Any debentures repurchased by us will be paid for in cash.

A “fundamental change” will be deemed to have occurred at the time after the debentures are originally issued that any of the following occurs:

 

(1)

a “person” or “group” within the meaning of Section 13(d) of the Exchange Act other than us, our subsidiaries or our or their employee benefit plans, files a Schedule TO or any other schedule, form or

 

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report under the Exchange Act disclosing that such person or group has become the direct or indirect “beneficial owner,” as defined in Rule 13d-3 under the Exchange Act, of our common equity representing more than 50% of the total voting power of all shares of our capital stock entitled to vote generally in elections of directors;

 

(2)

consummation of any share exchange, consolidation or merger of us pursuant to which our common stock will be converted into cash, securities or other property or any sale, lease or other transfer in one transaction or a series of transactions of all or substantially all of the consolidated assets of us and our subsidiaries, taken as a whole, to any person other than one of our subsidiaries; provided, however, that a share exchange, consolidation or merger transaction where (i) our common stock is not changed or exchanged except to the extent necessary to reflect a change in our jurisdiction of incorporation or (ii) the holders of more than 50% of all classes of our common equity immediately prior to such transaction own, directly or indirectly, more than 50% of the aggregate voting power of all shares of capital stock of the continuing or surviving corporation or transferee or the parent thereof immediately after such event will not constitute a fundamental change;

 

(3)

our stockholders approve any plan or proposal for the liquidation or dissolution of us; or

 

(4)

our common stock (or other common stock into which the debentures are then convertible) ceases to be listed on a U.S. national securities exchange or quoted on an established automated over-the-counter trading market in the United States.

A fundamental change as a result of clause (2) above will not be deemed to have occurred, however, if at least 90% of the consideration received or to be received by our common stockholders, excluding cash payments for fractional shares and cash payments made in respect of dissenters’ or appraisal rights, in connection with the transaction or transactions otherwise constituting the fundamental change consists of shares of common stock traded on a U.S. national securities exchange or which will be so traded or quoted when issued or exchanged in connection with a fundamental change (these securities being referred to as “publicly traded securities”) and as a result of this transaction or transactions the debentures become convertible into cash and such publicly traded securities as described under “—Recapitalizations, reclassifications and changes of our common stock.”

On or before the 20th business day after the occurrence of a fundamental change, we will provide to all holders of the debentures, the trustee and the paying agent a notice of the occurrence of the fundamental change and of the resulting repurchase right. Such notice will state, among other things:

 

•

the events causing the fundamental change;

 

•

the date of the fundamental change;

 

•

the last date on which a holder may exercise the repurchase right;

 

•

the fundamental change repurchase price;

 

•

the fundamental change repurchase date;

 

•

the name and address of the paying agent and the conversion agent, if applicable;

 

•

if applicable, the applicable conversion rate and any adjustments to the applicable conversion rate;

 

•

if applicable, that the debentures with respect to which a fundamental change repurchase notice has been delivered by a holder may be converted only if the holder withdraws the fundamental change repurchase notice in accordance with the terms of the indenture; and

 

•

the procedures that holders must follow to require us to repurchase their debentures.

Simultaneously with providing such notice, we will publish a notice containing this information in a newspaper of general circulation in The City of New York or publish the information on our website or through such other public medium as we may use at that time.

 

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To exercise the repurchase right, you must deliver, on or before the business day immediately preceding the fundamental change repurchase date, the debentures to be repurchased, duly endorsed for transfer, together with a written repurchase notice and the form entitled “Form of Fundamental Change Repurchase Notice” on the reverse side of the debentures duly completed, to the paying agent. Your repurchase notice must state:

 

•

if certificated, the certificate numbers of your debentures to be delivered for repurchase;

 

•

the portion of the principal amount of debentures to be repurchased, which must be $1,000 or an integral multiple thereof; and

 

•

that the debentures are to be repurchased by us pursuant to the applicable provisions of the debentures and the indenture.

You may withdraw any repurchase notice (in whole or in part) by a written notice of withdrawal delivered to the paying agent prior to the close of business on the business day prior to the fundamental change repurchase date. The notice of withdrawal must state:

 

•

the principal amount of the withdrawn debentures;

 

•

if certificated debentures have been issued, the certificate numbers of the withdrawn debentures, or if not certificated, your notice must comply with appropriate DTC procedures; and

 

•

the principal amount, if any, that remains subject to the repurchase notice.

We will be required to repurchase the debentures on the fundamental change repurchase date. You will receive payment of the fundamental change repurchase price promptly following the later of the fundamental change repurchase date or the time of book-entry transfer or the delivery of the debentures. If the paying agent holds money or securities sufficient to pay the fundamental change repurchase price of the debentures on the business day following the fundamental change repurchase date, then:

 

•

the debentures will cease to be outstanding and interest will cease to accrue (whether or not book-entry transfer of the debentures is made or whether or not the debenture is delivered to the paying agent); and

 

•

all other rights of the holder will terminate, other than the right to receive the fundamental change repurchase price and previously accrued and unpaid interest upon delivery or transfer of the debentures.

In connection with any repurchase offer pursuant to a fundamental change repurchase notice, we will, if required:

 

•

comply with the provisions of the tender offer rules under the Exchange Act that may then be applicable; and

 

•

file a Schedule TO or any other required schedule under the Exchange Act.

The repurchase rights of the holders could discourage a potential acquiror of us. The fundamental change repurchase feature, however, is not the result of management’s knowledge of any specific effort to obtain control of us by any means or part of a plan by management to adopt a series of anti-takeover provisions.

The term fundamental change is limited to specified transactions and may not include other events that might adversely affect our financial condition. In addition, the requirement that we offer to repurchase the debentures upon a fundamental change may not protect holders in the event of a highly leveraged transaction, reorganization, merger or similar transaction involving us.

No debentures may be repurchased at the option of holders upon a fundamental change if there has occurred and is continuing an event of default other than an event of default that is cured by the payment of the fundamental change repurchase price of the debentures.

 

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The definition of fundamental change includes a phrase relating to the conveyance, transfer, sale, lease or disposition of “all or substantially all” of our consolidated assets. There is no precise, established definition of the phrase “substantially all” under applicable law. Accordingly, the ability of a holder of the debentures to require us to repurchase its debentures as a result of the conveyance, transfer, sale, lease or other disposition of less than all of our assets may be uncertain.

If a fundamental change were to occur, we may not have enough funds to pay the fundamental change repurchase price or the terms of subordination could restrict such payment. See “Risk Factors—Risks related to the debentures” under the captions “We may not have the ability to repurchase the debentures in cash upon the occurrence of a fundamental change, or to pay cash upon the conversion of debentures, as required by the indenture governing the debentures” and “The debentures are our unsecured junior obligations and are subordinated in right of payment to our existing and future senior debt obligations and any indebtedness or other liabilities of our subsidiaries.” If we fail to repurchase the debentures when required following a fundamental change, we will be in default under the indenture. In addition, we may in the future incur other indebtedness with similar change in control provisions permitting our holders to accelerate or to require us to repurchase our indebtedness upon the occurrence of similar events or on some specific dates.

We will not be required to make an offer to repurchase the debentures upon a fundamental change if a third party makes the offer in the manner, at the times, and otherwise in compliance with the requirements set forth in the indenture applicable to an offer by us to repurchase the debentures upon a fundamental change and such third party purchases all debentures validly tendered and not withdrawn upon such offer.

Consolidation, merger and sale of assets

The indenture provides that we may not consolidate with or merge with or into, or convey, transfer or lease all or substantially all of our properties and assets to, another person, unless (i) the resulting, surviving or transferee person (if not us) is a person organized and existing under the laws of the United States, any state thereof or the District of Columbia, and such entity (if not us) expressly assumes by supplemental indenture all our obligations under the debentures, the indenture and, to the extent then still operative, the registration rights agreement; and (ii) immediately after giving effect to such transaction, no default has occurred and is continuing under the indenture. Upon any such consolidation, merger or transfer, the resulting, surviving or transferee person shall succeed to, and may exercise every right and power of, us under the indenture. If the predecessor is still in existence after the transaction, it will be released from its obligations and covenants under the indenture and the debentures, except in the case of a lease of all or substantially all of our properties and assets.

Although these types of transactions are permitted under the indenture, certain of the foregoing transactions could constitute a fundamental change (as defined above) permitting each holder to require us to repurchase the debentures of such holder as described above.

Reports

The indenture governing the debentures provides that any document or report that we are required to file with the U.S. Securities and Exchange Commission (the “SEC”) pursuant to Section 13 or 15(d) of the Exchange Act will be filed with the trustee within 30 days after such document or report is required to be filed with the SEC.

Events of default

Each of the following is an event of default:

 

(1)

default in any payment of interest on any debenture when due and payable and such default continues for a period of 30 days (provided that a valid extension of the interest payment period by us during an extension period pursuant to the indenture shall not constitute a default in the payment of interest for this purpose);

 

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(2)

default in the payment of principal of any debenture when due and payable at its stated maturity, upon optional redemption, upon required repurchase, upon declaration or otherwise;

 

(3)

our failure to comply with our obligation to deliver the cash and/or shares of common stock payable upon exercise of a holder’s conversion right and such failure continues for three calendar days;

 

(4)

our failure to give notice of a fundamental change as described under “—Fundamental change permits holders to require us to repurchase debentures” or notice of a specified corporate transaction as described under “—Conversion upon specified corporate transactions,” in each case when due;

 

(5)

our failure to comply with our obligations under “Consolidation, merger and sale of assets”;

 

(6)

our failure to comply with any of our other agreements contained in the debentures or the indenture for 60 days after we receive written notice from the trustee or the holders of at least 25% in principal amount of the debentures then outstanding;

 

(7)

default by us or any of our subsidiaries with respect to any mortgage, agreement or other instrument under which there may be outstanding, or by which there may be secured or evidenced any indebtedness for money borrowed in excess of $50,000,000 in the aggregate of us and/or any of our subsidiaries, whether such indebtedness now exists or shall hereafter be created (i) resulting in such indebtedness becoming or being declared due and payable or (ii) constituting a failure to pay the principal or interest of any such debt when due and payable at its stated maturity, upon required repurchase, upon declaration or otherwise; and

 

(8)

certain events of bankruptcy, insolvency, or reorganization involving us or any of our significant subsidiaries (the “bankruptcy provisions”).

If an event of default occurs and is continuing, the trustee by notice to us, or the holders of at least 25% in principal amount of the outstanding debentures by notice to us and the trustee, may, and the trustee at the request of such holders shall, declare 100% of the principal of and accrued and unpaid interest on all the debentures to be due and payable. Upon such a declaration, such principal and accrued and unpaid interest will be due and payable immediately. In addition, in case of an event of default in respect of the bankruptcy provisions, 100% of the principal of and accrued and unpaid interest on the debentures will automatically become due and payable.

Notwithstanding the foregoing, the indenture provides that, if we so elect, the sole remedy for an event of default relating to the failure to file any documents or reports that we are required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act and for any failure to comply with the requirements of Section 314(a)(1) of the Trust Indenture Act or of the covenant described above in “—Reports,” will for the first 365 days after the occurrence of such an event of default, consist exclusively of the right to receive additional interest on the debentures, which we refer to as “reporting additional interest,” at an annual rate equal to 0.25% of the principal amount of the debentures during the first 180 days after the occurrence of such an event of default and 0.50% of the principal amount of the debentures from the 181st day until the 365th day following the occurrence of such an event of default. If we so elect, such reporting additional interest will be payable on all outstanding debentures from and including the date on which such event of default first occurs to but not including the 365th day thereafter (or such earlier date on which the event of default relating to a failure to comply with such requirements has been cured or waived). On the 365th day after such event of default (or earlier, if the event of default is cured or waived prior to such 365th day), reporting additional interest will cease to accrue and the debentures will be subject to acceleration as provided above if the event of default is continuing. The provisions of the indenture described in this paragraph will not affect the rights of holders of debentures in the event of the occurrence of any other event of default. In the event we do not elect to pay the reporting additional interest prior to acceleration upon an event of default in accordance with this paragraph, the debentures will be subject to acceleration as provided above.

In order to elect to pay reporting additional interest as the sole remedy during the first 365 days after the occurrence of an event of default relating to the failure to comply with the reporting obligations in accordance

 

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with the immediately preceding paragraph, we must notify all holders of debentures and the trustee and paying agent of such election prior to the date that is 60 days after the notice of default is given to us by the trustee or holder of at least 25% in principal amount of the outstanding debentures. If we fail to timely give such notice, the debentures will be immediately subject to acceleration as provided above.

The holders of a majority in principal amount of the outstanding debentures may waive all past defaults (except with respect to nonpayment of principal or interest) and rescind any such acceleration with respect to the debentures and its consequences if (i) rescission would not conflict with any judgment or decree of a court of competent jurisdiction and (ii) all existing events of default, other than the nonpayment of the principal of and interest on the debentures that have become due solely by such declaration of acceleration, have been cured or waived.

Subject to the provisions of the indenture relating to the duties of the trustee, if an event of default occurs and is continuing, the trustee will be under no obligation to exercise any of the rights or powers under the indenture at the request or direction of any of the holders unless such holders have offered to the trustee indemnity or security reasonably satisfactory to it against any loss, liability or expense. Except to enforce the right to receive payment of principal or interest when due, no holder may pursue any remedy with respect to the indenture or the debentures unless:

 

(1)

such holder has previously given the trustee notice that an event of default is continuing;

 

(2)

holders of at least 25% in principal amount of the outstanding debentures have requested the trustee to pursue the remedy;

 

(3)

such holders have offered the trustee security or indemnity reasonably satisfactory to it against any loss, liability or expense;

 

(4)

the trustee has not complied with such request within 60 days after the receipt of the request and the offer of security or indemnity; and

 

(5)

the holders of a majority in principal amount of the outstanding debentures have not given the trustee a direction that, in the opinion of the trustee, is inconsistent with such request within such 60-day period.

Subject to certain restrictions, the holders of a majority in principal amount of the outstanding debentures are given the right to direct the time, method and place of conducting any proceeding for any remedy available to the trustee or of exercising any trust or power conferred on the trustee.

The indenture provides that if an event of default has occurred and is continuing, the trustee will be required in the exercise of its powers to use the degree of care that a prudent person would use in the conduct of its own affairs. The trustee, however, may refuse to follow any direction that conflicts with law or the indenture or that the trustee determines is unduly prejudicial to the rights of any other holder or that would involve the trustee in personal liability. Prior to taking any action under the indenture, the trustee will be entitled to indemnification satisfactory to it in its sole discretion against all losses and expenses caused by taking or not taking such action.

The indenture provides that if a default occurs and is continuing and is known to the trustee, the trustee must mail to each holder notice of the default within 60 days after it occurs. Except in the case of a default in the payment of principal of or interest on any debenture, the trustee may withhold notice if and so long as the trustee in good faith determines that withholding notice is in the interests of the holders. In addition, we are required to deliver to the trustee, within 120 days after the end of each fiscal year, a certificate indicating whether the signers thereof know of any default that occurred during the previous year. We are also required to deliver to the trustee, within 60 days after our knowledge of the occurrence thereof, written notice of any events which would constitute certain defaults, their status and what action we are taking or propose to take in respect thereof.

 

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Modification and amendment

Subject to certain exceptions, the indenture or the debentures may be amended with the consent of the holders of at least a majority in principal amount of the debentures then outstanding (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, debentures) and, subject to certain exceptions, any past default or compliance with any provisions may be waived with the consent of the holders of a majority in principal amount of the debentures then outstanding (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, debentures). However, without the consent of each holder of an outstanding debenture affected, no amendment may, among other things:

 

(1)

reduce the rate of or extend the stated time for payment of interest on any debenture;

 

(2)

reduce the principal of or extend the stated maturity of any debenture;

 

(3)

make any change that impairs or adversely affects the right of a holder to convert any debenture or the conversion rate thereof;

 

(4)

reduce the redemption price or fundamental change repurchase price of any debenture or amend or modify in any manner adverse to the holders of debentures our obligation to make such payments, whether through an amendment or waiver of provisions in the indenture (including the definitions contained therein) or otherwise;

 

(5)

make any debenture payable in currency other than that stated in the debenture;

 

(6)

modify the subordination provisions of the indenture in a manner adverse to holders of the debentures;

 

(7)

impair the right of any holder to receive payment of principal and interest on such holder’s debentures or to institute suit for the enforcement of any payment on or with respect to such holder’s debenture; or

 

(8)

make any change in the provisions of the indenture which require each holder’s consent, in the provisions relating to waivers of past defaults or in the provisions relating to amendment of the indenture.

Without the consent of any holder, we and the trustee may amend the indenture to:

 

(1)

cure any ambiguity or correct any omission, defect or inconsistency in the indenture, so long as such action will not materially adversely affect the interests of holders of the debentures, provided that any such amendment made solely to conform the provisions of the indenture to this prospectus will be deemed not to adversely affect the interests of holders of the debentures;

 

(2)

provide for the assumption by a successor corporation, partnership, trust or limited liability company of our obligations under the indenture;

 

(3)

provide for uncertificated debentures in addition to or in place of certificated debentures (provided that we receive an opinion of reputable tax counsel that the uncertificated debentures are issued in registered form for purposes of Section 163(f) of the Code, or in a manner such that the uncertificated debentures are described in Section 163(f)(2)(B) of the Code);

 

(4)

add guarantees with respect to the debentures;

 

(5)

secure the debentures;

 

(6)

add to our covenants for the benefit of the holders or surrender any right or power conferred upon us;

 

(7)

fix a specified dollar amount that will apply to all future conversions of debentures and provide that we will be required to satisfy our settlement obligations on conversion of debentures as described under “Conversion rights—Payment upon conversion” by paying cash with respect to such specified dollar amount;

 

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(8)

make any change that does not materially adversely affect the rights of any holder; or

 

(9)

comply with any requirement of the SEC in connection with the qualification of the indenture under the Trust Indenture Act.

The consent of the holders is not necessary under the indenture to approve the particular form of any proposed amendment. It is sufficient if such consent approves the substance of the proposed amendment. After an amendment under the indenture becomes effective, we are required to mail to the holders a notice briefly describing such amendment. However, the failure to give such notice to all the holders, or any defect in the notice, will not impair or affect the validity of the amendment.

Discharge

We may satisfy and discharge our obligations under the indenture by delivering to the securities registrar for cancellation all outstanding debentures or by depositing with the trustee or delivering to the holders, as applicable, after the debentures have become due and payable, whether at stated maturity, on any redemption or fundamental change repurchase date, upon conversion or otherwise, cash, shares of common stock (solely to satisfy outstanding conversions, if any) or government obligations sufficient to pay all of the outstanding debentures and paying all other sums payable under the indenture by us. Such discharge is subject to terms contained in the indenture.

Calculations in respect of debentures

Except as otherwise provided above, we or our agents will be responsible for making all calculations called for under the debentures. These calculations include, but are not limited to, determinations of the last reported sale prices of our common stock, accrued interest payable on the debentures and the conversion rate of the debentures. We or our agents will make all these calculations in good faith and, absent manifest error, our calculations will be final and binding on holders of debentures. We or our agents will provide a schedule of our calculations to each of the trustee and the conversion agent, and each of the trustee and conversion agent is entitled to rely conclusively upon the accuracy of our calculations without independent verification. The trustee will forward the calculations to any holder of debentures upon the request of that holder.

Trustee

U.S. Bank National Association is the trustee, registrar, paying agent and conversion agent. We maintain banking relationships in the ordinary course of business with the trustee and its affiliates. William L. Chenevich, a member of our board of directors, is currently the Vice Chairman of Technology and Operations for U.S. Bancorp, an affiliate of U.S. Bank National Association.

No personal liability of stockholders, employees, officers or directors

None of our, or of any successor entity’s, direct or indirect stockholders, employees, officers or directors, as such, past, present or future, shall have any personal liability in respect of our obligations under the indenture or the debentures solely by reason of his or its status as such stockholder, employee, officer or director.

Governing law

The indenture provides that it and the debentures will be governed by, and construed in accordance with, the laws of the State of New York.

 

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Book-entry, settlement and clearance

The global debentures

The debentures will initially be issued in the form of one or more registered debentures in global form, without interest coupons (which we refer to as the “global debentures”). Upon issuance, each of the global debentures will be deposited with the trustee as custodian for DTC and registered in the name of Cede & Co., as nominee of DTC.

Ownership of beneficial interests in a global debenture will be limited to persons who have accounts with DTC (which we refer to as “DTC participants”) or persons who hold interests through DTC participants. We expect that under procedures established by DTC:

 

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upon deposit of a global debenture with DTC’s custodian, DTC will credit portions of the principal amount of the global debenture to the accounts of the DTC participants designated by the initial purchaser; and

 

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ownership of beneficial interests in a global debenture will be shown on, and transfer of ownership of those interests will be effected only through, records maintained by DTC (with respect to interests of DTC participants) and the records of DTC participants (with respect to other owners of beneficial interests in the global debenture).

Beneficial interests in global debentures may not be exchanged for debentures in physical, certificated form except in the limited circumstances described below.

The global debentures and beneficial interests in the global debentures will be subject to restrictions on transfer as described under “Transfer restrictions.”

Book-entry procedures for the global debentures

All interests in the global debentures will be subject to the operations and procedures of DTC. We provide the following summary of those operations and procedures solely for the convenience of investors. The operations and procedures of DTC are controlled by that settlement system and may be changed at any time. Neither we nor the initial purchaser are responsible for those operations or procedures.

DTC has advised us that it is:

 

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a limited purpose trust company organized under the laws of the State of New York;

 

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a “banking organization” within the meaning of the New York State banking law;

 

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a member of the Federal Reserve System;

 

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a “clearing corporation” within the meaning of the Uniform Commercial Code; and

 

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a “clearing agency” registered under Section 17A of the Exchange Act.

DTC was created to hold securities for its participants and to facilitate the clearance and settlement of securities transactions between its participants through electronic book-entry changes to the accounts of its participants. DTC’s participants include securities brokers and dealers, including the initial purchaser, banks and trust companies, clearing corporations and other organizations. Indirect access to DTC’s system is also available to others such as banks, brokers, dealers and trust companies; these indirect participants clear through or maintain a custodial relationship with a DTC participant, either directly or indirectly. Investors who are not DTC participants may beneficially own securities held by or on behalf of DTC only through DTC participants or indirect participants in DTC.

 

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So long as DTC’s nominee is the registered owner of a global debenture, that nominee will be considered the sole owner and holder of the debentures represented by that global debenture for all purposes under the indenture. Except as provided below, owners of beneficial interests in a global debenture:

 

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will not be entitled to have debentures represented by the global debenture registered in their names;

 

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will not receive or be entitled to receive physical, certificated debentures; and

 

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will not be considered the owners or holders of the debentures under the indenture for any purpose, including with respect to the giving of any direction, instruction or approval to the trustee under the indenture.

As a result, each investor who owns a beneficial interest in a global debenture must rely on the procedures of DTC to exercise any rights of a holder of debentures under the indenture (and, if the investor is not a participant or an indirect participant in DTC, on the procedures of the DTC participant through which the investor owns its interest).

Payments of principal and interest with respect to the debentures represented by a global debenture will be made by the trustee to DTC’s nominee as the registered holder of the global debenture. Neither we nor the trustee will have any responsibility or liability for the payment of amounts to owners of beneficial interests in a global debenture, for any aspect of the records relating to or payments made on account of those interests by DTC, or for maintaining, supervising or reviewing any records of DTC relating to those interests.

Payments by participants and indirect participants in DTC to the owners of beneficial interests in a global debenture will be governed by standing instructions and customary industry practice and will be the responsibility of those participants or indirect participants and DTC.

Transfers between participants in DTC will be effected under DTC’s procedures and will be settled in same-day funds.

Certificated debentures

Debentures in physical, certificated form will be issued and delivered to each person that DTC identifies as a beneficial owner of the related debentures only if:

 

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DTC notifies us at any time that it is unwilling or unable to continue as depositary for the global debentures and a successor depositary is not appointed within 90 days;

 

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DTC ceases to be registered as a clearing agency under the Exchange Act and a successor depositary is not appointed within 90 days;

 

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we, at our option, notify the trustee that we elect to cause the issuance of certificated debentures, subject to DTC’s procedures (DTC has advised that, under its current practices, it would notify its participants of our request, but will withdraw beneficial interests from the global debentures only at the request of each DTC participant); or

 

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an event of default in respect of the debentures has occurred and is continuing, and the trustee has received a request from DTC.

In addition, beneficial interests in a global debenture may be exchanged for certificated debentures in accordance with procedures of DTC.

Registration rights

We and the initial purchaser have entered into a registration rights agreement concurrently with the issuance of the debentures.

 

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Pursuant to the registration rights agreement, we have agreed for the benefit of the holders of the debentures and the common stock issuable upon conversion of the debentures that we will, at our cost:

 

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no later than 90 days after the original date of issuance of the debentures, file a shelf registration statement covering resales of the debentures and the common stock issuable upon the conversion thereof pursuant to Rule 415 under the Securities Act;

 

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unless the shelf registration statement becomes effective automatically, use our reasonable efforts to cause the shelf registration statement to be declared effective under the Securities Act no later than 200 days after the original date of issuance of the debentures; and

 

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subject to certain rights to suspend use of the shelf registration statement, use our reasonable efforts to keep the shelf registration statement continuously effective until the earliest of the second anniversary of the date of the original issuance of the debentures and such time as all of the debentures and the common stock issuable on the conversion thereof (i) cease to be outstanding, (ii) have been sold or otherwise transferred pursuant to an effective registration statement, (iii) have been sold pursuant to Rule 144 under circumstances in which any legend borne by the debentures or common stock relating to restrictions on transferability thereof is removed, (iv) are eligible to be sold pursuant to Rule 144(k) or any successor provision (but not Rule 144A) or (v) are otherwise freely transferable without restriction.

We will be permitted to suspend the effectiveness of the shelf registration statement or the use of the prospectus that is part of the shelf registration statement during specified periods (not to exceed 120 days in the aggregate in any 12 month period) in certain circumstances, including circumstances relating to pending corporate developments. We need not specify the nature of the event giving rise to a suspension in any notice to holders of the debentures of the existence of a suspension.

The following requirements and restrictions will generally apply to a holder selling debentures or common stock issued on the conversion thereof pursuant to the shelf registration statement:

 

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the holder will be required to be named as a selling securityholder in the related prospectus;

 

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the holder will be required to deliver a prospectus to purchasers;

 

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the holder will be subject to some of the civil liability provisions under the Securities Act in connection with any sales; and

 

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the holder will be bound by the provisions of the registration rights agreement which are applicable to the holder (including indemnification obligations).

We will agree to pay predetermined additional interest as described herein (“additional interest”) to holders of the debentures if the shelf registration statement is not timely filed or made effective as described above or if the prospectus is unavailable for periods in excess of those permitted above. The additional interest, if any, is payable at the same time, in the same manner and to the same persons as ordinary interest. The additional interest will accrue until a failure to file or become effective or unavailability is cured in respect of any debentures required to bear the legend set forth in “Transfer restrictions” at a rate per annum equal to 0.25% for the first 90 days after the occurrence of the event and 0.50% after the first 90 days. However, no additional interest will accrue following the end of the period during which we are required to use our reasonable efforts to keep the shelf registration statement effective. In no event shall additional interest accrue at a rate exceeding 0.50%. In addition, no additional interest will be payable in respect of shares of common stock into which the debentures have been converted.

The additional interest will accrue from and including the date on which any the registration default occurs to but excluding the date on which all registration defaults have been cured. We will have no other liabilities for monetary damages with respect to our registration obligations. However, if we breach, fail to comply with or

 

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violate some provisions of the registration rights agreement, the holders of the debentures may be entitled to equitable relief, including injunction and specific performance.

We have agreed in the registration rights agreement to give notice to all holders of the filing and effectiveness of the shelf registration statement.

 

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DESCRIPTION OF CAPITAL STOCK

Under our restated certificate of incorporation, as amended, we are authorized to issue up to 1,000,000,000 shares of common stock and up to 5,000,000 shares of preferred stock. As of September 28, 2007, we had outstanding 225,486,395 shares of common stock and no preferred stock.

A description of the material terms and provisions of our restated certificate of incorporation, restated bylaws, stockholder rights plan and Delaware law affecting the rights of holders of our capital stock is set forth below. The description is intended as a summary, and is qualified in its entirety by reference to our restated certificate of incorporation, restated bylaws and stockholders’ rights plan incorporated by reference in the registration statement of which this prospectus is a part.

Common Stock

Subject to preferences that may be applicable to any preferred stock outstanding at the time, the holders of outstanding shares of common stock are entitled to receive dividends out of assets legally available therefor at such times and in such amounts as our board of directors from time to time may determine. Holders of common stock are also entitled to one vote for each share held on all matters submitted to a vote of stockholders. The common stock is not entitled to preemptive rights and is not subject to conversion or redemption. Upon liquidation, dissolution or winding-up of VeriSign, the assets legally available for distribution to stockholders would be distributed ratably among the holders of the common stock and any participating preferred stock outstanding at that time after payment of liquidation preferences, if any, on any outstanding preferred stock and payment of other claims of creditors. Each outstanding share of common stock is, and all shares of common stock currently outstanding are, fully paid and nonassessable.

Preferred Stock

VeriSign is authorized to issue up to 5,000,000 shares of preferred stock. Our board of directors is authorized, subject to limitations prescribed by the Delaware General Corporation Law, or DGCL, to provide for the issuance of preferred stock in one or more series, to establish from time to time the number of shares to be included in each such series, to fix the rights, preferences and privileges of the shares of each wholly unissued series and any qualifications, limitations or restrictions thereon, and to increase or decrease the number of shares of any such series, but not below the number of shares of such series then outstanding, without any further vote or action by the stockholders. Our board of directors may authorize the issuance of preferred stock with voting or conversion rights that could adversely affect the voting power or other rights of the holders of common stock. The issuance of preferred stock may have the effect of delaying, deferring or preventing a change in control of VeriSign and may adversely affect the market price of the common stock, and the voting and other rights of the holders of common stock. VeriSign has no current plan to issue any shares of preferred stock.

Stockholder Rights Plan

VeriSign has adopted a stockholder rights plan that may discourage, delay or prevent a change of control and make any future unsolicited acquisition attempt more difficult. Under the stockholder rights plan, the rights will become exercisable only upon the occurrence of certain events specified in the plan, including the acquisition of 20% of our outstanding common stock by a person or group, and each right entitles the holder, other than an “acquiring person,” to acquire shares of our common stock at a 50% discount to the then-prevailing market price. Our board of directors may redeem outstanding rights at any time prior to a person becoming an “acquiring person,” at a price of $0.001 per right. Prior to such time, the terms of the rights may be amended by our board of directors without the approval of the holders of the rights.

 

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Delaware anti-takeover law and charter and bylaw provisions

Provisions of Delaware law and our charter documents could make the acquisition of us and the removal of incumbent officers and directors more difficult.

Delaware takeover statute

We are governed by Section 203 of the DGCL, which prohibits a Delaware corporation from engaging in any business combination with any interested stockholder for a period of three years after the date that the stockholder became an interested stockholder, unless:

 

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before that date, the board of directors of the corporation approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder;

 

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upon completion of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction began, excluding for purposes of determining the number of shares outstanding those shares owned by persons who are directors and also officers of which can be issued under employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or

 

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on or after that date, the business combination is approved by the board of directors and authorized at an annual or special meeting of stockholders and not by written consent, by the affirmative vote of at least 66 2/3% of the outstanding voting stock that is not owned by the interested stockholder.

In general, Section 203 of the DGCL defines an interested stockholder as any entity or person who, with affiliates and associates owns, or within the three year period immediately prior to the business combination, beneficially owned 15% or more of the outstanding voting stock of the corporation. Section 203 of the DGCL defines business combination to include:

 

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any merger or consolidation involving the corporation and the interested stockholder;

 

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any sale, transfer, pledge or other disposition of 10% or more of the assets of the corporation involving the interested stockholder;

 

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subject to specified exceptions, any transaction that results in the issuance or transfer by the corporation of any stock of the corporation to the interested stockholder;

 

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any transaction involving the corporation that increases the proportionate share of the stock of any class or series of the corporation beneficially owned by the interested stockholder; or

 

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the receipt by the interested stockholder of the benefit of any loans, advances, guarantees, pledges or other financial benefits provided by or through the corporation.

Advance notice provisions

Our restated bylaws establish advance notice procedures for stockholder proposals and nominations of candidates for election as directors other than nominations made by or at the direction of the board of directors or a committee of the board of directors.

Special meeting requirements

Our restated certificate of incorporation and restated bylaws provide that special meetings of stockholders may only be called by either our board of directors pursuant to a resolution adopted by a majority of the total number of authorized directors, the chairman of the board, the chief executive officer or the president.

 

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Cumulative voting

Neither our restated certificate of incorporation nor our restated bylaws provides for cumulative voting in the election of directors. These provisions may deter a hostile takeover or delay a change in control or management of VeriSign.

No action by stockholder consent

Our restated certificate of incorporation provides that our stockholders may not take action by written consent, but may only take action at annual or special meetings of our stockholders.

Limitation on liability and indemnification of officers and directors

Section 145 of the DGCL authorizes a court to award, or a corporation’s board of directors to grant, indemnity to directors and officers in terms sufficiently broad to permit such indemnification under certain circumstances for liabilities including reimbursement for expenses incurred arising under the Securities Act.

As permitted by the DGCL, our restated certificate of incorporation provides that our directors shall not be liable to us or our stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (1) for any breach of the director’s duty of loyalty to the corporation or its stockholders, (2) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (3) under Section 174 of the DGCL (regarding unlawful payments of dividends and unlawful stock purchases or redemptions), or (4) for any transaction from which the director derived an improper personal benefit.

In addition, as permitted by Section 145 of the DGCL, our restated bylaws provide that we are required to indemnify to the fullest extent authorized by law, subject to certain very limited exceptions, any person who was or is made a party or is threatened to be made a party to or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he or she is or was a director or an officer of VeriSign or is or was serving at the request of VeriSign as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to an employee benefit plan (an “Indemnitee”), against all expense, liability and loss (including attorneys’ fees, judgments, fines, ERISA excise taxes or penalties and amounts paid in settlement) reasonably incurred or suffered by such Indemnitee in connection therewith;

We have entered or intend to enter into indemnification agreements with each of our current directors and executive officers to give such directors and executive officers additional contractual assurances regarding the scope of the indemnification set forth in our restated certificate of incorporation and to provide additional procedural protections.

Transfer agent and registrar

The transfer agent and registrar for our common stock is Mellon Investor Services LLC. Its address is P.O. Box 3315, South Hackensack, New Jersey 07606.

 

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MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS

This section summarizes the material U.S. federal income tax considerations relating to the purchase, ownership, and disposition of the debentures and of the common stock into which the debentures may be converted. This summary does not provide a complete analysis of all potential tax considerations. The information provided below is based on the Internal Revenue Code of 1986, as amended (referred to herein as the “Code”), Treasury regulations issued under the Code, judicial authority and administrative rulings and practice, all as of the date of this prospectus and all of which are subject to change, possibly on a retroactive basis. As a result, the tax considerations of purchasing, owning or disposing of debentures or common stock could differ from those described below. This summary deals only with purchasers who hold debentures or common stock into which debentures have been converted as “capital assets” within the meaning of Section 1221 of the Code. This summary does not deal with persons in special tax situations, such as financial institutions, insurance companies, S corporations, regulated investment companies, tax exempt investors, dealers in securities and currencies, U.S. expatriates, persons holding debentures as a position in a “straddle,” “hedge,” “conversion transaction,” or other integrated transaction for tax purposes, or U.S. holders (as defined below) whose functional currency is not the U.S. dollar. Further, this discussion does not address the consequences under U.S. alternative minimum tax rules, U.S. federal estate or gift tax laws, the tax laws of any U.S. state or locality, or any non-U.S. tax laws.

As used herein, the term “U.S. holder” means a beneficial owner of debentures or common stock into which debentures have been converted that is, for U.S. federal income tax purposes:

 

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an individual citizen or resident of the United States;

 

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a corporation, or other entity treated as a corporation, created or organized in or under the laws of the United States, any state or the District of Columbia;

 

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an estate, the income of which is subject to U.S. federal income tax regardless of its source; or

 

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a trust if, (i) a court within the United States is able to exercise primary supervision over its administration and one or more U.S. persons have authority to control all of its substantial decisions or (ii) it has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person.

As used herein, the term “non-U.S. holder” means a beneficial owner, other than a partnership, of debentures or common stock into which debentures have been converted that is not a U.S. holder.

If a partnership, including for this purpose any entity treated as a partnership for U.S. tax purposes, is a beneficial owner of debentures or common stock into which debentures have been converted, the treatment of a partner in the partnership generally will depend upon the status of the partner and upon the activities of the partnership. A holder of debentures that is a partnership and partners in such a partnership should consult their independent tax advisors about the U.S. federal income tax consequences of holding and disposing of debentures and common stock into which debentures have been converted.

Classification of the debentures

Pursuant to the terms of the indenture, we and every holder of debentures agree (in the absence of an administrative pronouncement or judicial ruling to the contrary), for U.S. federal income tax purposes, to treat the debentures as debt instruments that are subject to the Treasury regulations that govern contingent payment debt instruments (the “contingent debt regulations”) and to be bound by our application of the contingent debt regulations to the debentures, including generally our determination of the rate at which interest will be deemed to accrue on the debentures (and the related “projected payment schedule” as described below). The remainder of this discussion describes the treatment of the debentures in accordance with that agreement and our determinations.

 

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No authority directly addresses the treatment of all aspects of the debentures for United States federal income tax purposes. The Internal Revenue Service (the “Service”) issued Revenue Ruling 2002-31 and Notice 2002-36, in which the Service addressed the United States federal income tax classification and treatment of a debt instrument similar, although not identical, to the debentures. The Service concluded that the debt instrument addressed in that published guidance was subject to the contingent debt regulations. In addition, the Service clarified various aspects of the applicability of certain other provisions of the Code to the debt instrument addressed in that published guidance. The applicability of Revenue Ruling 2002-31 and Notice 2002-36 to any particular debt instrument, however, such as the debentures, is not certain. In addition, no rulings are expected to be sought from the Service with respect to any of the U.S. federal income tax consequences discussed below, and no assurance can be given that the Service will not take contrary positions. As a result, no assurance can be given that the Service will agree with the tax characterizations and the tax consequences described below. A different treatment of the debentures from that described below could affect the amount, timing, source and character of income, gain or loss with respect to an investment in the debentures and could require a holder to accrue interest income at a rate different from the “comparable yield” rate described below.

U.S. holders

Accrual of interest on the debentures

Pursuant to the contingent debt regulations, U.S. holders of the debentures will be required to accrue interest income on the debentures on a constant-yield basis, as described below, regardless of whether such holders use the cash or accrual method of tax accounting. Accordingly, U.S. holders will be required to include interest in income each year in excess of the interest accruals on the debentures for non-tax purposes and in excess of any interest payments actually received in that year.

The contingent debt regulations provide that a U.S. holder must accrue an amount of ordinary interest income, as original issue discount for U.S. federal income tax purposes, for each accrual period prior to and including the maturity date of the debentures that equals:

 

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the product of (i) the adjusted issue price (as defined below) of the debentures as of the beginning of the accrual period and (ii) the comparable yield (as defined below) of the debentures, adjusted for the length of the accrual period;

 

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divided by the number of days in the accrual period; and

 

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multiplied by the number of days during the accrual period that the U.S. holder held the debentures.

The “adjusted issue price” of a debenture is its “issue price” increased by any interest income previously accrued, determined without regard to any adjustments to interest accruals described below, and decreased by the amount of any noncontingent payments and the projected amount of any contingent payments with respect to the debentures. A debenture’s “issue price” is the first price at which a substantial amount of the debentures is sold to the public, excluding sales to bond houses, brokers or similar persons or organizations acting in the capacity of underwriters, placement agents or wholesalers.

The “comparable yield” is the annual yield we believe we would pay, as of the initial issue date of the debentures, on a fixed-rate, nonconvertible debt security with no contingent payments, but with terms and conditions otherwise comparable to those of the debentures, including the level of subordination, term, timing of the payments and general market conditions. The precise manner of determining the comparable yield is not entirely specified by the contingent debt regulations. We have determined a comparable yield of 8.5%. There can be no assurance that the Service will not challenge our determination of the comparable yield or that such challenge will not be successful. If our determination of the comparable yield were successfully challenged by the Service, the redetermined comparable yield could be materially greater than or less than the comparable yield determined by us.

The contingent debt regulations require that we provide to holders, solely for U.S. federal income tax purposes, a schedule of the projected amounts of payments (to which we refer as “projected payments”) on the

 

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debentures, which is used to determine a holder’s interest accruals and adjustments. This schedule must produce a yield to maturity that equals the comparable yield. The projected payment schedule includes estimates for certain contingent interest payments and an estimate for a payment at maturity taking into account the projected value of the stock into which the debentures are convertible at maturity. In this regard, the fair market value of any common stock (and the amount of any cash) received by a U.S. holder upon conversion will be treated as a contingent payment. U.S. holders may obtain the projected payment schedule by submitting a written request for such information to us at: VeriSign, 487 East Middlefield Road, Mountain View, California 94043, Attention: Corporate Secretary and Attention: Treasurer.

The comparable yield and the projected payment schedule are not used for any purpose other than to determine a holder’s interest accruals and adjustments thereto in respect of the debentures for U.S. federal income tax purposes. They do not constitute a projection or representation regarding the actual amounts payable on the debentures or the value at any time of the common stock into which the debentures may be converted.

Adjustments to interest accruals on the debentures

If, during any taxable year, a U.S. holder of debentures receives actual payments with respect to its debentures that, in the aggregate, exceed the total amount of projected payments for that taxable year, the U.S. holder will incur a “net positive adjustment” under the contingent debt regulations equal to the amount of such excess. The U.S. holder will treat a “net positive adjustment” as additional interest income. For this purpose, the payments in a taxable year include the fair market value of property (including common stock received upon conversion of the debentures) received in that year.

If a U.S. holder receives in a taxable year actual payments with respect to the debentures that, in the aggregate, are less than the amount of projected payments for that taxable year, the U.S. holder will incur a “net negative adjustment” under the contingent debt regulations equal to the amount of such deficit. This net negative adjustment will (i) reduce the U.S. holder’s interest income on the debentures for that taxable year, and (ii) to the extent of any excess after the application of (i), give rise to an ordinary loss to the extent of the U.S. holder’s interest income on the debentures during prior taxable years, reduced to the extent such interest was offset by prior net negative adjustments. Any negative adjustment in excess of the amounts described in (i) and (ii) will be carried forward to offset future interest income with respect to the debentures or to reduce the amount realized on a sale, exchange, conversion, redemption or other disposition of the debentures. A net negative adjustment is not subject to the two percent floor limitation on miscellaneous itemized deductions.

Special rules will apply if the amount of a contingent payment on a debenture becomes fixed more than six months prior to the due date of the payment. Generally, in this case a U.S. holder would be required to make adjustments to account for the difference between the present value of the amount so treated as fixed and the present value of the projected payment. The present value of each amount is determined by discounting the amount from the date the payment is due to the date the payment is fixed, discounted at the comparable yield of the debenture. A U.S. holder’s tax basis in the debenture would also be affected. U.S. holders are urged to consult their tax advisers concerning the application of these special rules.

Sale, exchange, conversion, redemption or other disposition of debentures

A U.S. holder generally will recognize gain or loss if the holder disposes of a debenture in a sale, exchange, conversion, redemption or other disposition. As described above, our calculation of the comparable yield and the projected payment schedule for the debentures includes the receipt of stock upon conversion as a contingent payment with respect to the debentures, which generally is binding on holders of debentures. Accordingly, we intend to treat the receipt of common stock by a U.S. holder upon the conversion of a debenture as a payment under the contingent debt regulations. So viewed, a conversion of a debenture into common stock also will result in taxable gain or loss to a U.S. holder.

 

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The holder’s gain or loss will equal the difference between the proceeds received by the holder, reduced by any net negative adjustment carried forward from prior years, as described above, and the holder’s adjusted tax basis in the debenture. The proceeds received by the holder will include the amount of any cash and the fair market value of any other property received for the debenture, including the fair market value of any common stock received.

The holder’s adjusted tax basis in the debenture generally will equal the amount the holder paid for the debenture, increased by any interest income previously accrued by the U.S. holder under the contingent debt regulations (determined without regard to any adjustments to interest accruals described above) and decreased by the amount of any noncontingent payments and the projected amount of any contingent payments that previously have been scheduled to be made in respect of the debentures (without regard to the actual amounts paid).

Any gain recognized will be treated as ordinary interest income pursuant to the contingent debt regulations. Any loss will be ordinary loss to the extent the total interest previously included in income exceed the total net negative adjustments on the debenture the holder took into account as ordinary loss (as discussed above), and thereafter capital loss (which will be long-term if the debenture has been held for more than one year). The deductibility of capital losses is subject to limitation. A U.S. holder who sells a debenture at a loss, or who converts a debenture into our common stock at a loss, that meets certain thresholds may be required to file a disclosure statement with the Service.

A U.S. holder’s tax basis in common stock received upon a conversion of a debenture will equal the then current fair market value of such common stock. The U.S. holder’s holding period for the common stock received will commence on the day immediately following the date of receipt.

Purchases of debentures at a price other than the adjusted issue price

If a U.S. holder purchases a debenture in the secondary market for an amount that differs from the adjusted issue price of the debenture at the time of purchase, the U.S. holder will be required to accrue interest income on the debenture in accordance with the comparable yield even if market conditions have changed since the date of issuance. Except to the extent described below as to debentures that are considered to be exchange listed, a U.S. holder must reasonably determine whether the difference between the purchase price for a debenture and the adjusted issue price of a debenture is attributable to a change in expectation as to the contingent amounts potentially payable in respect of the debenture, a change in interest rates since the debenture were issued, or both, and allocate the difference accordingly. Adjustments allocated to a change in interest rates will cause, as the case may be, a positive adjustment or a negative adjustment to interest inclusion. If the purchase price of a debenture is less than its adjusted issue price of the debenture, a positive adjustment will result, and if the purchase price is more than the adjusted issue price of the debenture, a negative adjustment will result. To the extent that an adjustment is attributable to a change in interest rates, it must be reasonably allocated to the daily portions of interest over the remaining term of the debenture. To the extent that the difference between the purchase price for the debenture and the adjusted issue price of the debenture is attributable to a change in expectations as to the contingent amounts potentially payable in respect of the debenture, and not to a change in the market interest rates, a U.S. holder will be required to reasonably allocate that difference to the contingent payments. Adjustments allocated to the contingent payments will be taken into account as positive or negative adjustments, as the case may be, when the contingent payments are made. Any negative or positive adjustment of the kind described above will decrease or increase, respectively, the tax basis in the debenture.

Finally, if a debenture is considered to be exchange listed property then, instead of allocating the difference between adjusted issue price of the debenture and the U.S. holder’s tax basis in the debenture to any projected payments, the holder generally would be permitted, but not required, to allocate such difference on a pro rata basis to the daily portions of interest determined under the projected payment schedule over the remaining term of the debenture. This pro rata allocation, however, would not be reasonable and thus would not be permitted to the extent that the allocation produces a deemed yield on the debenture that is less than the applicable federal rate

 

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for the debenture as of the issue date. The debentures will be considered exchange listed if they are listed on either a national securities exchange or an interdealer quotation system sponsored by a national securities association. Currently, the debentures are not considered to be exchange listed.

Some U.S. holders will receive Forms 1099-OID reporting interest accruals on their debenture. Those forms will not, however, reflect the effect of any positive or negative adjustments resulting from the purchase of a debenture in the secondary market at a price that differs from its adjusted issue price on the date of purchase. U.S. holders are urged to consult their tax advisor as to whether, and how, such adjustments should be made to the amounts reported on any Form 1099-OID.

Constructive dividends on debentures

The terms of the debentures allow for changes in the conversion rate of the debentures in certain circumstances. A change in conversion rate that allows debenture holders to receive more shares of common stock on conversion may be treated as a taxable dividend to U.S. holders, notwithstanding the fact that the holder does not receive a cash payment. A taxable constructive stock dividend would result, for example, if the conversion rate is adjusted to compensate debenture holders for distributions of cash or property to our stockholders. In addition, if an event occurs that increases the interests of holders of the debentures and the conversion rate is not adjusted, the resulting increase in the proportionate interests of the holders of the debentures could be treated as a taxable dividend to the U.S. holders. On the other hand, a change in conversion rate could simply prevent the dilution of the debenture holders’ interests upon a stock split or other change in capital structure and generally would not be treated as a constructive stock dividend.

Although there is no judicial authority directly on point, the Service may take the position that a constructive dividend with respect to the debentures would not be eligible for a dividends-received deduction or the preferential tax rates applicable to dividends (as discussed below). Any taxable constructive stock dividends resulting from a change to, or failure to change, the conversion rate would in other respects be treated in the same manner as dividends paid in cash or other property. These dividends would result in dividend income to the recipient, to the extent of our current or accumulated earnings and profits, with any excess treated as a nontaxable return of capital or as capital gain as more fully described below. Holders should carefully review the conversion rate adjustment provisions and consult their tax advisors with respect to the tax consequences of any such adjustment.

Dividends on common stock

If, after a U.S. holder converts a debenture into common stock, we make a distribution in respect of that stock, other than certain pro rata distributions of shares of common stock, the distribution will be treated as a taxable dividend, to the extent it is paid from our current or accumulated earnings and profits. If the distribution exceeds our current and accumulated earnings and profits, the excess will be treated first as a tax-free return of the holder’s adjusted tax basis in its common stock. Any remaining excess will be treated as capital gain. Eligible dividends received by a non-corporate U.S. holder will be subject to tax at the special reduced rate generally applicable to long-term capital gain (15%) through December 31, 2010, after which the rate applicable to dividends is scheduled to return to the tax rate generally applicable to ordinary income. The rate reduction will not apply to dividends received to the extent that the U.S. holder elects to treat dividends as “investment income,” which may be offset by investment expense. Furthermore, a U.S. holder generally may be eligible for this reduced rate only if the U.S. holder has held our common stock for more than 60 days during the 121-day period beginning 60 days before the ex-dividend date. If the U.S. holder is a U.S. corporation, it would generally be permitted to claim the dividends-received deduction, provided certain requirements are met.

U.S. holders should consult their tax advisors regarding the holding period and other requirements that must be satisfied in order to qualify for the dividends-received deduction and the reduced maximum tax rate on dividends.

 

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Sale or exchange of common stock

A U.S. holder will generally recognize gain or loss on a sale or exchange of common stock. The holder’s gain or loss will equal the difference between the proceeds received by the holder and the holder’s adjusted tax basis in the stock. The proceeds received by the holder will include the amount of any cash and the fair market value of any other property received for the stock. The gain or loss recognized by a holder on a sale or exchange of stock will be long-term capital gain or loss if the holder held the stock for more than one year. The deductibility of capital losses is subject to limitations.

Non-U.S. holders

Treatment of debentures

Subject to the discussion of backup withholding below, a non-U.S. holder will not be subject to U.S. federal income tax (or any withholding thereof) in respect of payments and accruals of interest on the debentures, including principal and interest payments, a payment in common stock, or a combination of stock and cash pursuant to a conversion, and any gain realized upon the sale, exchange, redemption, retirement or other taxable disposition of a debenture, if each of the following requirements is satisfied:

 

•

the amount received is not U.S. trade or business income (as defined below);

 

•

the non-U.S. holder provides us or our paying agent with a properly completed IRS Form W-8BEN (or successor form), or an appropriate substitute form, together with all appropriate attachments, signed under penalties of perjury, identifying the non-U.S. holder and stating, among other things, that the non-U.S. holder is not a U.S. person. If a debenture is held through a securities clearing organization, bank or other financial institution that holds customers’ securities in the ordinary course of its trade or business, this requirement is satisfied if (i) the non-U.S. holder provides such a form to the organization or institution and (ii) the organization or institution, under penalties of perjury, certifies to us that it has received such a form from the beneficial owner or another intermediary and furnishes us or our paying agent with a copy thereof;

 

•

the non-U.S. holder does not actually or constructively own 10% or more of the total combined voting power of all classes of our stock entitled to vote;

 

•

the non-U.S. holder is not a “controlled foreign corporation” (in general, a foreign corporation is a controlled foreign corporation if more than 50% of its stock is owned, actually or constructively, by one or more U.S. persons that each owns, actually or constructively, at least 10% of the corporation’s voting stock) that is actually or constructively related to us; and

 

•

to the extent that payments on the debentures are described in Section 871(h)(4)(A)(i) (i.e., payments reflecting contingent interest), our common stock continues to be actively traded within the meaning of Section 871(h)(4)(C)(v)(I) and we have not been a U.S. real property holding corporation (as defined in the Code) at any time during the applicable statutory period. We believe that we have not at any time been, are not, and do not anticipate becoming, a U.S. real property holding corporation.

If all of these conditions are not met, a 30% U.S. withholding tax will apply to interest income on the debentures, which will be withheld from scheduled interest payments, contingent interest payments or principal payments on the debentures, to the extent thereof, unless either (i) an applicable income tax treaty between the United States and the non-U.S. holder’s country of residence reduces or eliminates such tax or (ii) the interest is U.S. trade or business income (as defined below) and, in each case, the non-U.S. holder complies with applicable certification requirements. In the case of the second exception, the non-U.S. holder generally will be subject to U.S. federal income tax with respect to all income from the debentures on a net income basis at regular graduated rates. Additionally, non-U.S. holders that are corporations could be subject to a branch profits tax on such income. Special procedures contained in Treasury regulations may apply to partnerships, trusts and intermediaries. We urge non-U.S. holders to consult their tax advisers for information on the impact of these withholding regulations.

 

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For purposes of this discussion, any interest or dividend income and any gain realized on the sale, exchange, redemption, retirement or other taxable disposition of a debenture or common stock will be considered “U.S. trade or business income” if such income or gain is (i) effectively connected with the conduct of a trade or business in the United States, and (ii) in the case of an applicable treaty resident, attributable to a permanent establishment (or in the case of an individual, to a fixed base) in the United States.

Constructive dividends on debentures

A non-U.S. holder generally will be subject to U.S. federal withholding tax at a 30% rate on income attributable to an adjustment to (or failure to make an adjustment to) the conversion rate of the debentures that constitutes a constructive dividend as described in “U.S. holders—Constructive dividends on debentures” above, which tax may be withheld from interest, shares of common stock or proceeds subsequently paid or credited to a non-U.S. holder, unless either (i) an applicable income tax treaty between the United States and the non-U.S. holder’s country of residence reduces or eliminates such tax or (ii) the amount received is U.S. trade or business income (as defined above), and, in each case, the non-U.S. holder complies with applicable certification requirements. In the case of the second exception, the non-U.S. holder generally will be subject to U.S. federal income tax with respect to the constructive dividend on a net income basis at regular graduated rates. Additionally, non-U.S. holders that are corporations could be subject to a branch profits tax on such income at a rate of 30% or a lower rate if so specified by an applicable income tax treaty between the United States and the non-U.S. holder’s country of residence.

Dividends

Dividends paid to a non-U.S. holder on common stock received on conversion of a debenture generally will be subject to U.S. withholding tax at a 30% rate, unless either (i) such rate is reduced or eliminated under the terms of a tax treaty between the United States and the non-U.S. holder’s country of residence or (ii) the dividends are U.S. trade or business income and, in each case the non-U.S. holder complies with the applicable certification requirements. In the case of the second exception, the non-U.S. holder generally will be subject to U.S. federal income tax with respect to the constructive dividend on a net income basis at regular graduated rates. Additionally, non-U.S. holders that are corporations could be subject to a branch profits tax at a rate of 30% on such income or a lower rate if so specified by an applicable income tax treaty between the United States and the non-U.S. holder’s country of residence.

Disposition of common stock

Subject to the discussion of backup withholding below, generally, a non-U.S. holder will not be subject to U.S. federal income tax (or any withholding thereof) on any gain realized upon the sale or exchange of common stock unless:

 

•

the gain is U.S. trade or business income (as defined above);

 

•

such holder is an individual present in the United States for 183 days or more in the taxable year of the sale, exchange, redemption, retirement or other disposition and certain other conditions are met;

 

•

such holder was a citizen or resident of the United States and is subject to special rules that apply to expatriates; or

 

•

we have been a U.S. real property holding corporation at any time within the shorter of the five-year period preceding such sale or exchange and the non-U.S. holder’s holding period in the common stock and our common stock ceases to be regularly traded on an established securities market or such holder owns or is deemed to own more than 5% of our common stock. We believe that we have not at any time been, are not, and do not anticipate becoming, a U.S. real property holding corporation.

 

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A non-U.S. holder described in the first bullet point above will generally be subject to U.S. federal income tax on the net gain derived from the sale at regular graduated rates. A non-U.S. holder that is a foreign corporation and is described in the first bullet point above will be subject to tax on gain at regular graduated U.S. federal income tax rates and, in addition, may be subject to a branch profits tax at a 30% rate or a lower rate if so specified by an applicable income tax treaty between the United States and the non-U.S. holder’s country of residence. An individual non-U.S. holder described in the second bullet point above will be subject to U.S. federal income tax at a 30% rate, or at a lower rate specified in an applicable income tax treaty between the United States and the non-U.S. holder’s country of residence, on the gain derived from the sale or exchange, which gain may be offset by U.S. source capital losses, even though the holder is not considered a resident of the United States.

Backup withholding and information reporting

Accruals of interest and payment of dividends to both individual U.S. holders and non-U.S. holders of debentures or common stock and payments of the proceeds of the sale or other disposition of the debentures or common stock to individual U.S. holders will be subject to information reporting. In addition, payments of the proceeds of the sale or other disposition of the debentures or common stock to non-U.S. holders may be subject to information reporting unless the non-U.S. holder complies with certain certification procedures. Payments and accruals to both individual U.S. holders and non-U.S. holders may also be subject to backup withholding (currently at a rate of 28%) unless the holder provides us or our paying agent with a correct taxpayer identification number and otherwise complies with applicable certification requirements. The certification procedures required to claim an exemption from the withholding tax described above will satisfy the certification requirements necessary to avoid backup withholding as well.

Backup withholding is not an additional tax. The amount of any backup withholding from a payment to a holder of debentures or common stock under the backup withholding rules can be credited against any U.S. federal income tax liability of the holder.

The preceding discussion of certain U.S. federal income tax considerations is for general information only; it is not tax advice. You should consult your own tax advisor regarding the particular U.S. federal, state, local and foreign tax consequences of purchasing, holding and disposing of our debentures or common stock, including the consequences of any proposed change in applicable laws.

 

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PRINCIPAL STOCKHOLDERS

The following table sets forth certain information with respect to the beneficial ownership of our common stock as of September 28, 2007 by:

 

•

each current stockholder who is known to own beneficially more than 5% of our common stock;

 

•

each current director;

 

•

each of the Named Executive Officers (see the “Summary Compensation Table for Fiscal 2006” in our Annual Report on Form 10-K for the year ended December 31, 2006); and

 

•

all current directors and executive officers as a group.

The percentage ownership is based on 225,486,395 shares of common stock outstanding at September 28, 2007. Shares of common stock that are subject to options currently exercisable or exercisable within 60 days of September 28, 2007 are deemed outstanding for the purpose of computing the percentage ownership of the person holding such options but are not deemed outstanding for computing the percentage ownership of any other person. Unless otherwise indicated in the footnotes following the table, the persons and entities named in the table have sole voting and sole investment power with respect to all shares beneficially owned, subject to community property laws where applicable.

 

		Shares Beneficially Owned
Name and Address of Beneficial Owner		Number (1)			Percent (1)
Greater Than 5% Stockholders
T. Rowe Price Associates, Inc. 100 East Pratt Street Baltimore, MD 21202		18,192,176	(2)		8.07	%
Private Capital Management, L.P. 8889 Pelican Bay Blvd., Suite 500 Naples, FL 34108		17,610,384	(3)		7.81
Eton Park Capital Management, L.P. 825 Third Avenue, 8th Floor New York, NY 10022		13,705,700	(4)		6.08
Directors and Named Executive Officers
William A. Roper, Jr. (5)		294,144			*
Albert E. Clement (6)		266,230			*
Robert J. Korzeniewski (7)		619,081			*
Mark D. McLaughlin (8)		203,619			*
Scott G. Kriens (9)		178,340			*
D. James Bidzos (10)		156,308			*
William L. Chenevich (11)		116,620			*
Louis A. Simpson (12)		107,715			*
John M. Donovan (13)		95,450			*
Roger H. Moore (14)		86,331			*
Michelle Guthrie (15)		40,528			*
John D. Roach (16)		17,052			*
Vernon L. Irvin		—			*
Stratton D. Sclavos		—			*
Dana L. Evan (17)		277,104			*
Edward A. Mueller (18)		48,331			*
All current directors and executive officers as a group (18 persons) (19)		3,067,148			1.36	%

 

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*	Less than 1% of VeriSign’s outstanding common stock.

(1)

The percentages are calculated using 225,486,395 outstanding shares of the Company’s common stock on September 28, 2007 as adjusted pursuant to Rule 13d-3(d)(1)(i). Pursuant to Rule 13d-3(d)(1) of the Securities Exchange Act of 1934, as amended, beneficial ownership information also includes shares subject to options exercisable within 60 days of September 28, 2007.

(2)

Based on Schedule 13G/A filed on February 14, 2007 with the SEC by T. Rowe Price Associates, Inc., with respect to beneficial ownership of 18,192,176 shares. T. Rowe Price Associates, Inc. has sole voting power over 4,120,484 of these shares and sole dispositive power over 18,192,176 of these shares.

(3)

Based on Schedule 13G filed on February 14, 2007 with the SEC by Private Capital Management, L.P., with respect to beneficial ownership of 17,610,384 shares. Private Capital Management, L.P. has sole voting power and sole dispositive power over 598,900 of these shares and shared voting power and shared dispositive power over 17,011,484 of these shares.

(4)

Based on Schedule 13G filed on April 23, 2007 with the SEC by Eton Park Fund, L.P. (“EP Fund”), Eton Park Master Fund, Ltd. (“EP Master Fund”), Eton Park Associates, L.P. (“EP Associates”), Eton Park Capital Management, L.P. (“EP Management”), and Eric M. Mindich (“Mr. Mindich”), with respect to beneficial ownership of 13,705,700 shares of Common Stock. EP Fund has shared voting power and shared dispositive power over 4,796,955 of these shares. EP Master Fund has shared voting power and shared dispositive power over 8,908,705 of these shares. EP Associates serves as the general partner of EP Fund. EP Management serves as investment manager to EP Master Fund. EP Associates, the general partner of EP Fund, has the power to direct the affairs of EP Fund including decisions with respect to the disposition of the proceeds from the sale of the shares of Common Stock held by EP Fund. Eton Park Associates, L.L.C. serves as the general partner of EP Associates. Mr. Mindich is managing member of Eton Park Associates, L.L.C. and may, by virtue of his position as managing member, be deemed to have power to direct the vote and disposition of the shares of common stock held by EP Fund. EP Master Fund is a client of EP Management. Eton Park Capital Management, L.L.C. serves as the general partner of EP Management. Mr. Mindich is the managing member of Eton Park Capital Management, L.L.C. and may be, by virtue of his position as managing member, deemed to have power to direct the vote and disposition of the shares of common stock held by EP Master Fund. Mr. Mindich disclaims beneficial ownership of the Common Stock reported herein, other than the portion of such shares which relates to his individual economic interest in each of EP Fund and EP Master Fund.

(5)

Includes 10,000 shares held indirectly by the FMT CO Cust IRA Rollover FBO William A. Roper, Jr., of which Mr. Roper has sole beneficial ownership. Also includes 80,017 shares subject to options held directly by Mr. Roper. Also includes 115,827 shares subject to restricted stock units and 88,300 shares subject to performance-based restricted stock units. Mr. Roper is our President and Chief Executive Officer and a member of the Board of Directors.

(6)	Includes 202,881 shares subject to options held by Mr. Clement. Also includes 8,635 shares subject to restricted stock units and 49,506 shares subject to performance-based restricted stock units. Mr. Clement is our Chief Financial Officer.

(7)	Includes 485,000 shares subject to options held directly by Mr. Korzeniewski. Also includes 13,000 shares subject to restricted stock units and 38,605 shares subject to performance-based restricted stock units. Mr. Korzeniewski is our Executive Vice President, Corporate Development.

(8)	Includes 124,087 shares subject to options held directly by Mr. McLaughlin. Also includes 17,650 shares subject to restricted stock units and 61,882 shares subject to performance-based restricted stock units. Mr. McLaughlin is our Executive Vice President, Products and Marketing.

(9)

Includes 80,000 shares held indirectly by the Kriens 1996 Trust U/T/A October 29, 1996, over which Mr. Kriens and his spouse exercise investment and voting control. Also includes 87,825 shares subject to options held directly by Mr. Kriens. Also includes 8,990 shares subject to restricted stock units.

(10)	Includes 92,043 shares subject to options held directly by Mr. Bidzos. Also includes 8,990 shares subject to restricted stock units. Mr. Bidzos is Chairman of our Board of Directors.

(11)	Includes 79,543 shares subject to options held directly by Mr. Chenevich. Also includes 8,990 shares subject to restricted stock units.

 

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(12)	Includes 47,200 shares subject to options held directly by Mr. Simpson. Also includes 8,990 shares subject to restricted stock units.

(13)	Includes 8,568 shares subject to options held directly by Mr. Donovan. Also includes 25,000 shares subject to restricted stock units and 61,882 shares subject to performance-based restricted stock units. Mr. Donovan is our Executive Vice President, Global Sales and Consulting Services.

(14)	Includes 75,325 shares subject to options held directly by Mr. Moore. Also includes 8,990 shares subject to restricted stock units.

(15)	Includes 30,013 shares subject to options held directly by Ms. Guthrie. Also includes 8,990 shares subject to restricted stock units.

(16)	Includes 2,637 shares subject to options held directly by Mr. Roach. Also includes 4,415 shares subject to restricted stock units.

(17)

Includes 21,675 shares held indirectly by the Evan 1991 Living Trust under which Ms. Evan and her spouse are co-trustees. Also includes 4,242 shares held indirectly by TDC&R Investments LP under which Ms. Evan and her spouse are 1% general partners and Ms. Evan’s children are limited partners with an ownership interest of 99%. Also includes 251,187 shares subject to options held directly by Ms. Evan. Ms. Evan is our former Executive Vice President, Finance and Administration and Chief Financial Officer and resigned from VeriSign on July 10, 2007.

(18)

Includes 1,000 shares held indirectly by the Fidelity Management Trust Company FBO Edward A. Mueller IRA, of which Mr. Mueller has sole beneficial ownership. Includes 45,806 shares subject to options held directly by Mr. Mueller. Mr. Mueller is our former Chairman of the Board of Directors and resigned from our Board of Directors on August 15, 2007.

(19)	Includes the shares described in footnotes (5)-(16) and 885,730 shares beneficially held by six additional executive officers, of which 680,303 shares are subject to options, 38,637 are subject to restricted stock units, and 145,239 shares are subject to performance-based restricted stock units.

 

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SELLING SECURITYHOLDERS

We originally issued the debentures to J.P. Morgan Securities Inc., referred to as the initial purchaser, in transactions exempt from the registration requirements of the Securities Act. The debentures were immediately resold by the initial purchaser to persons reasonably believed by the initial purchaser to be “qualified institutional buyers” within the meaning of Rule 144A under the Securities Act. Selling securityholders, including their transferees, pledges or donees or their successors, may from time to time offer and sell the debentures. Our registration of the debentures and the shares of common stock issuable upon conversion of the debentures does not necessarily mean that the selling securityholders will sell all or any of the debentures or the common stock. Except as set forth below, none of the selling securityholders has, or within the past three years has had, any position, office or other material relationship with us or any of our predecessors or affiliates.

The following table sets forth certain information as of November 1, 2007, except where otherwise noted, concerning the principal amount of debentures beneficially owned by each selling securityholder and the number of shares of underlying common stock that may be offered from time to time by each selling securityholder with this prospectus. The information is based on information provided by or on behalf of the selling securityholders. We have assumed for purposes of the table below that the selling securityholders will sell all of the debentures and all of the common stock issuable upon conversion of the debentures pursuant to this prospectus, and that any other shares of our common stock beneficially owned by the selling securityholders will continue to be beneficially owned.

Information about the selling securityholders may change over time. In particular, the selling securityholders identified below may have sold, transferred or otherwise disposed of all or a portion of their debentures since the date on which they provided to us information regarding their debentures. Any changed or new information given to us by the selling securityholders will be set forth in supplements to this prospectus or amendments to the registration statement of which the accompanying prospectus is a part, if and when necessary.

 

		Principal Amount of Debentures				Number of Shares of Common Stock
Name of Selling Securityholder (1)		Beneficially Owned That May Be Offered		Percentage of Debentures Outstanding		Beneficially Owned (2)(3)		That May be Offered		Beneficially Owned After the Offering (4)
ACIG Insurance Company (5)		90,000		*		2,618		2,618		—
Acuity Master Fund (6)		1,000,000		*		29,096		29,096		—
Allstate Insurance Company ± (7)		3,800,000		*		119,467		110,567		8,900
American Beacon Funds (5)		410,000		*		11,929		11,929		—
Argent Classic Convertible Arbitrage Fund II, L.P. (8)		450,000		*		13,093		13,093		—
Argent Classic Convertible Arbitrage Fund L.P. (8)		1,780,000		*		51,792		51,792		—
Argent Classic Convertible Arbitrage Fund Ltd. (8)		11,020,000		*		320,646		320,646		—
Argent LowLev Convertible Arbitrage Fund II, LLC (8)		170,000		*		4,946		4,946		—
Argent LowLev Convertible Arbitrage Fund Ltd. (8)		4,770,000		*		138,791		138,791		—
Argentum Multi-Strategy Fund Ltd. (8)		490,000		*		14,257		14,257		—
Argentum Multi-Strategy Fund LP—Classic (8)		160,000		*		4,655		4,655		—
Argentum Multi-Strategy Fund Ltd.—Classic (8)		40,000		*		1,163		1,163		—
Aristeia International Limited (9)		129,330,000		10.4		3,763,089		3,763,089		—

 

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		Principal Amount of Debentures				Number of Shares of Common Stock
Name of Selling Securityholder (1)		Beneficially Owned That May Be Offered		Percentage of Debentures Outstanding		Beneficially Owned (2)(3)		That May be Offered		Beneficially Owned After the Offering (4)
Aristeia Partners L.P. (10)		15,670,000		1.3		455,946		455,946		—
Asante Health Systems (5)		385,000		*		11,202		11,202		—
Aventis Pension Master Trust (5)		690,000		*		20,076		20,076		—
Boilermakers—Blacksmith Pension Trust (5)		4,100,000		*		119,296		119,296		—
Cal Farley’s Boys Ranch Foundation (5)		233,000		*		6,779		6,779		—
CALAMOS Convertible and High Income Fund (5)		24,500,000		1.96		712,871		712,871		—
CALAMOS Convertible Fund—CALAMOS Investment Trust (5)		11,800,000		*		343,342		343,342		—
CALAMOS Convertible Opportunities and Income Fund (5)		19,500,000		1.56		567,387		567,387		—
CALAMOS Global Opportunities Fund LP (5)		500,000		*		14,548		14,548		—
CALAMOS Global Total Return Fund (5)		900,000		*		26,187		26,187		—
CALAMOS Global Growth & Income Fund—CALAMOS Investment Trust (5)		11,000,000		*		320,064		320,064		—
CALAMOS Growth & Income Fund—CALAMOS Investment Trust (5)		54,904,000		4.39		1,597,530		1,597,530		—
CALAMOS Growth & Income Portfolio—CALAMOS Advisors Trust (5)		330,000		*		9,601		9,601		—
CALAMOS High Yield Fund—CALAMOS Investment Trust (5)		4,200,000		*		122,206		122,206		—
CALAMOS Strategic Total Return Fund (5)		32,000,000		2.56		931,097		931,097		—
The California Wellness Foundation (5)		518,000		*		15,072		15,072		—
CBARB, a segregated account of Geode Capital Master Fund Ltd. (11)		6,000,000		*		174,580		174,580		—
CEMEX Pension Plan (5)		365,000		*		10,620		10,620		—
Class C Trading Company Ltd. (8)		3,400,000		*		98,929		98,929		—
Citadel Equity Fund Ltd. ± (12)		110,000,000		8.8		3,200,648		3,200,648		—
Congregation of the Sisters of Charity of the Incarnate Word (5)		100,000		*		2,909		2,909		—
Consolidated Fund of the R.W. Grand Lodge of F. & A.M. of Pennsylvania (5)		110,000		*		3,200		3,200		—
Credit Suisse Securities (USA) LLC # (13)		5,000,000		*		145,484		145,484		—
DBAG London ± (14)		136,204,000		10.9		3,963,100		3,963,100		—
Delta Airlines Master Trust (5)		1,550,000		*		45,100		45,100		—
Delta Pilots Disability and Survivorship Trust (5)		900,000		*		26,187		26,187		—
Deutsche Bank Securities Inc. # (15)		3,500,000		*		101,838		101,838		—
Dorinco Reinsurance Company (5)		2,025,000		*		58,921		58,921		—
The Dow Chemical Company Employees’ Retirement Plan (5)		4,250,000		*		123,661		123,661		—
Dunham Appreciation and Income Fund (5)		341,000		*		9,922		9,922		—
Elite Classic Convertible Arbitrage Ltd. (8)		210,000		*		6,110		6,110		—
Goldman, Sachs & Co. Profit Sharing Master Trust ± (16)		621,000		*		18,069		18,069		—

 

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		Principal Amount of Debentures				Number of Shares of Common Stock
Name of Selling Securityholder (1)		Beneficially Owned That May Be Offered		Percentage of Debentures Outstanding		Beneficially Owned (2)(3)		That May be Offered		Beneficially Owned After the Offering (4)
HFR CA Global Select Master Trust Account (8)		990,000		*		28,805		28,805		—
Housing Authority of the City of San Antonio Employees Money Purchase Pension Plan & Trust (5)		81,000		*		2,356		2,356		—
ICM Business Trust (17)		2,500,000		*		72,742		72,742		—
INOVA Health Care Services (5)		500,000		*		14,548		14,548		—
INOVA Health System Retirement Plan (5)		150,000		*		4,364		4,364		—
Institutional Benchmark Series (Master Feeder) Limited in respect of Electra Series c/o Quattro Global Capital, LLC (19)		1,070,000		*		31,133		31,133		—
Ionic Capital Master Fund Ltd. (18)		7,500,000		*		218,226		218,226		—
Knoxville Utilities Board Retirement System (5)		310,000		*		9,020		9,020		—
Linden Capital L.P. (20)		10,000,000		*		290,968		290,968		—
Lydian Global Opportunities Master Fund L.T.D. (21)		7,500,000		*		218,226		218,226		—
Lydian Overseas Partners Master Fund L.T.D. (21)		17,500,000		1.4		509,194		509,194		—
Lyxor / Acuity Fund ± (22)		900,000		*		26,187		26,187		—
Lyxor Master Fund Ref: Argent/LowLev CB c/o Argent (8)		1,420,000		*		41,317		41,317		—
Macomb County Employees’ Retirement System (5)		715,000		*		20,804		20,804		—
Magnetar Capital Master Fund, Ltd. (23)		20,000,000		1.6		581,936		581,936		—
Meriter Health Services, Inc. Employee Retirement Plan (5)		140,000		*		4,073		4,073		—
Morgan Stanley & Co. Incorporated (24)		22,500,000		1.8		654,678		654,678		2,973,997
North Dakota State Investment Board (5)		1,553,000		*		45,187		45,187
North Slope Borough (5)		283,000		*		8,234		8,234
Oz Special Funding (Ozmo), LP (25)		49,379,000		4.0		1,436,770		1,436,770		—
Polygon Global Opportunities Master Fund (26)		100,000,000		8.0		2,909,680		2,909,680		—
Partners Group Alternative Strategies PCC Limited, Red Delta Cell c/o Quattro Global Capital LLC (27)		630,000		*		18,330		18,330		—
Partners Group Alternative Strategies PCC LTD (8)		3,830,000		*		111,440		111,440		—
Port Authority of Allegheny County Consolidated Trust Fund (5)		130,000		*		3,782		3,782		—
Port Authority of Allegheny County Retirement and Disability Allowance Plan for the Employees Represented by Local 85 of the Amalgamated Transit Union (5)		1,425,000		*		41,462		41,462		—
Prisma Foundation (5)		555,000		*		16,148		16,148		—
Quattro Fund Ltd. (28)		7,700,000		*		224,045		224,045		—
Quattro Multistrategy Masterfund LP (28)		600,000		*		17,458		17,458		—

 

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		Principal Amount of Debentures				Number of Shares of Common Stock
Name of Selling Securityholder (1)		Beneficially Owned That May Be Offered		Percentage of Debentures Outstanding		Beneficially Owned (2)(3)			That May be Offered		Beneficially Owned After the Offering (4)
RCG Latitude Master Fund Ltd. ± (29)		6,000,000		*		174,580			174,580		—
RCG PB LTD ± (29)		3,500,000		*		101,838			101,838
Royal Bank of Canada ± (30)		20,000,000		1.6		581,936			581,936		—
Satellite Convertible Arbitrage Fund, LLC (31)		10,000,000		*		290,968			290,968		—
Silvercreek II Limited (32)		8,000,000		*		232,774			232,774		—
Silvercreek Limited Partnership (32)		16,000,000		1.3		465,548			465,548		—
SPT (5)		2,850,000		*		82,925			82,925
Stark Master Fund Ltd. (33)		30,000,000		2.4		872,904			872,904		—
Swiss Re Financial Products Corporation ± (34)		10,000,000		*		290,968	(34)		290,968		—
UBS LCC F/B/O: O’Conner Global Convertible Arbitrage Master Limited (36)		47,500,000		3.8		1,382,098			1,382,098		—
UBS O’Conner LLC F/B/O: O’Conner Global Convertible Arbitrage II Master Limited (36)		2,500,000		*		72,742			72,742		—
Union Carbide Retirement Account (5)		2,175,000		*		63,285			63,285		—
United States Province of Missionary Oblates, Inc. (5)		102,000		*		2,967			2,967		—
Univar USA Inc. Retirement Plan (5)		1,075,000		*		31,279			31,279		—
US Bank FBO Essentia Health Services (5)		385,000		*		11,202			11,202		—
Vicis Capital Master Fund (37)		20,000,000		1.6		581,936			581,936		—
Waterstone Market Neutral MAC51 Fund Ltd. (38)		13,480,000		1.1		392,224			392,224		—
Waterstone Market Neutral Master Fund, Ltd. (38)		26,520,000		2.1		771,647			771,647		—
Xavex Convertible Arbitrage 2 Fund (8)		1,210,000		*		35,207			35,207		—
Xavex Convertible Arbitrage 5 Fund ± (29)		500,000		*		14,548			14,548
Xavex Convertible Arbitrage 10 Fund (8)		1,210,000		*		35,207			35,207		—
Any other holders of debentures or future transferees, pledgees or donees of or from any such holder (39)		157,816,000		12.6		4,591,940			4,591,940		—
Total:		1,250,000,000				36,379,861			36,379,861		—

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*	Less than one percent (1%).

 

#	The selling securityholder is a registered broker-dealer.

 

±

The selling securityholder is an affiliate of a registered broker-dealer. Each of these selling securityholders has indicated to us that they have purchased the debentures in the ordinary course of business, and at the time of such purchase, had no agreements or understandings, directly or indirectly, with any person to distribute the debentures or the shares of common stock issuable upon conversion of the debentures.

 

(1)	Information concerning other selling securityholders will be set forth in supplements to this prospectus, from time to time, if required.

 

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(2)

Assumes conversion of all of the selling securityholders’ debentures at a conversion rate of 29.0968 shares of common stock per $1,000 principal amount of the debentures upon maturity. This conversion rate is subject to adjustment as described in “Description of Debentures — Conversion Rate Adjustments” above. As a result, the number of shares of common stock issuable upon conversion of the debentures may increase or decrease in the future. Excludes shares of common stock that may be issued by us upon the repurchase of the debentures as described under “Description of Debentures — Fundamental change permits holders to require us to repurchase debentures” above and fractional shares. The holders of the debentures will receive a cash adjustment for any fractional share amount resulting from conversion of the debentures, as described in “Description of the Debentures — Conversion Rights” above.

 

(3)

Calculated based on Rule 13d-3(d)(i) of the Exchange Act. The number of shares of common stock beneficially owned by each securityholder named above is less than 1% of our outstanding common stock, with the exception of Aristeia International Limited, Citadel Equity Fund Ltd., DBAG London, Polygon Global Opportunities Master Fund, calculated based on 220,953,447 shares of common stock outstanding as of October 31, 2007. In calculating this amount for each securityholder, we treated as outstanding the number of shares of common stock issuable upon conversion of all of that securityholder’s debentures, but we did not assume conversion of any other securityholder’s debentures.

 

(4)

For purposes of computing the number and percentage of debentures and shares of common stock to be held by the selling securityholders after the conclusion of the offering, we have assumed for purposes of this table above that the selling securityholders named above will sell all of their debentures and all of the common stock issuable upon conversion of their debentures offered by this prospectus, and that any other shares of our common stock beneficially owned by these selling securityholders will continue to be beneficially owned.

 

(5)	Nick Calamos, Chief Investment Officer of Calamos Advisors LLC has voting and investment control over these securities.

 

(6)	David J. Harris and Howard Needle have voting and investment control over these securities.

 

(7)	The Allstate Corporation, an SEC reporting company, is the parent company of Allstate Insurance Company, and has voting and investment control over these securities.

 

(8)	Nathanial Brown and Robert Richardson have voting and investment control over these securities.

 

(9)	Aristeia Capital LLC is the investment manager of Aristeia International Limited and is jointly owned by Kevin Tuner, Robert H. Lynch, Jr., Anthony Fraschella and William R. Techer, who have voting and investment control over these securities.

 

(10)	Aristeia Capital LLC is the investment manager of Aristeia Partners L.P. and is jointly owned by Kevin Tuner, Robert H. Lynch, Jr., Anthony Fraschella and William R. Techer, who have voting and investment control over these securities.

 

(11)	CBARB is a segregated account of Geode Capital Master Fund Ltd., an open-ended exempted mutual fund company registered as a segregated accounts company under the laws of Bermuda. Phil Dumas and Jacques Perold have voting and investment control over these securities.

 

(12)

Citadel Limited Partnership (“CLP”) is the trading manager of Citadel Equity Fund Ltd. and consequently has investment discretion over securities held by Citadel Equity Fund Ltd. Citadel Investment Group, LLC (“CIG”) controls CLP. Kenneth C. Griffin controls CIG and, therefore, has ultimate investment discretion over securities held by Citadel Equity Fund Ltd. CLP, CIG, and Mr. Griffin each disclaim beneficial ownership of the shares held by Citadel Equity Fund Ltd.

 

(13)	Jeff Andreski, Managing Director of Credit Suisse Securities (USA) LLC, has voting and investment control over these securities and disclaims beneficial ownership of these shares except for his pecuniary interest.

 

(14)	John Arnono has voting and investment control over these securities.

 

(15)	Deutsche Bank Securities Inc. is a publicly held entity and an investment company registered under the Investment Company Act of 1940, as amended.

 

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(16)	Daniel S. Och as Chief Executive Officer of Oz Management, LP, the investment manager to Goldman, Sachs & Co. Profit Sharing Master Trust, may be deemed to have voting and investment control over these securities.

 

(17)

Ionic Capital Partners LP (“ICP”) is the investment advisor of ICM Business Trust (the “Trust”) and consequently has voting and investment control over securities held by the Trust. Ionic Capital Management LLC (“ICM”) controls ICP. Bart Baum, Adam Radosti and Daniel Stone collectively control ICM and therefore have ultimate voting and investment control over securities held by the Trust. ICP, ICM and Messrs. Baum, Radosti and Stone each disclaim beneficial ownership of the securities held by the Trust except to the extent of its pecuniary interest therein.

 

(18)

Ionic Capital Partners LP (“ICP”) is the investment advisor of Ionic Capital Master Fund Ltd. (the “Master Fund”) and consequently has voting and investment control over securities held by the Master Fund. Ionic Capital Management LLC (“ICM”) controls ICP. Bart Baum, Adam Radosti and Daniel Stone collectively control ICM and therefore have ultimate voting and investment control over securities held by the Master Fund. ICP, ICM and Messrs. Baum, Radosti and Stone each disclaim beneficial ownership of the securities held by the Master Fund except to the extent of its pecuniary interest therein.

 

(19)	Gary Crowder has voting and investment control over these securities.

 

(20)	Siu Min Wong has voting and investment control over these securities.

 

(21)	David Friezo has voting and investment control over these securities.

 

(22)	SG Hambros Fund Managers (Jersey) Limited shares voting power and investment control over these securities. Lyxor AM is the sub-manager for the selling security holder. Lyxor AM and is a wholly owned subsidiary of Société Générale, which is an affiliate of Fimat USA LLC, a registered broker-dealer.

 

(23)

Magnetar Financial LLC is the investment advisor of Magnetar Capital Master Fund, Ltd. (“Magnetar Master Fund”) and consequently has voting control and investment discretion over securities held by Magnetar Master Fund. Magnetar Financial LLC disclaims beneficial ownership of the shares held by Magnetar Master Fund. Alec Litowitz has voting control over Supernova Management LLC, the general partner of Magnetar Capital Partners L.P., the sole managing member of Magnetar Financial LLC. As a result, Mr. Litowitz may be considered the beneficial owner of any shares deemed to be beneficially owned by Magnetar Financial LLC. Mr. Litowitz disclaims beneficial ownership of these securities.

 

(24)	Morgan Stanley & Co. Incorporated is a majority-owned subsidiary of Morgan Stanley, an SEC reporting company.

 

(25)	Daniel S. Och as Chief Executive Officer of Oz Management, LP, the investment manager to Oz Special Funding (Ozmo), LP, may be deemed to have voting and investment control over these securities.

 

(26)

Polygon Investment Partners LLP, Polygon Investment Partners L.P. and Polygon Investment Partners HK Limited (the “Investment Managers”), Polygon Investments Ltd. (the “Manager”), Alexander Jackson, Reade Griffith and Paddy Dear share voting and investment control over the securities held by Polygon Global Opportunities Master Fund (the “Master Fund”). The Investment Managers, the Manager, Alexander Jackson, Reade Griffith and Paddy Dear disclaim beneficial ownership of the securities held by the Master Fund.

 

(27)	Mark Rowe, Felix Haldner, Michael Fitchet and Denis O’Malley have voting and investment control over these securities.

 

(28)	Andrew Kaplan, Brian Swain and Louis Napoli have voting and investment control over these securities.

 

(29)

Ramius Captial Group, LLC (“Ramius Capital”) is the investment adviser of RCG Latitude Master Fund, Ltd. (“Latitude”) and Xavex Convertible Arbitrage 5 (“Xavex”) and consequently has voting control and investment discretion over securities held by Latitude and Xavex. Ramius Capital disclaims beneficial ownership of the shares held by Latitude and Xavex. Peter A. Cohen, Morgan B. Stark, Thomas W. Strauss and Jeffrey M. Solomon are the sole managing members of C4S & Co., LLC, the sole managing member of

 

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Ramius Capital. As a result, Messrs. Cohen, Stark, Strauss and Solomon may be considered beneficial owners of any shares deemed to be beneficially owned by Ramius Capital. Messrs. Cohen, Stark, Strauss and Solomon disclaim beneficial ownership of these shares.

 

(30)	The selling securityholder is a wholly-owned subsidiary of RBC Capital Markets Corporation, which is an institutional investment manager pursuant to section 13(f) of the Exchange Act and the rules thereunder.

 

(31)

The discretionary investment manager of the selling securityholder is Satellite Asset Management, L.P. (“SAM”). The controlling entity of SAM is Satellite Fund Management, LLC (“SFM”). The managing members of SFM are Lief Rosenblatt, Mark Sonnino & Gabe Nechamkin. SAM, SFN and each named individual disclaims beneficial ownership of these securities.

 

(32)	Louise Morwick, Bryn Joynt and Chris Witkowski have voting and investment control over these securities.

 

(33)	Michael A. Roght and Brian J. Stark have voting and investment control over these securities, but Messrs. Roth and Stark disclaim beneficial ownership of such securities.

 

(34)	The selling securityholder is an institutional investment manager pursuant to section 13(f) of the Securities Exchange Act and the rules thereunder.

 

(35)	The selling securityholder reports a short position of 276,600 shares as of September 11, 2007.

 

(36)	UBS O’Connor LLC (the Investment Manager) has voting and investment control over these securities, and is a wholly owned subsidiary of UBS AG, which is an SEC reporting company.

 

(37)	Vicis Capital LLC is the investment manager of Vicis Capital Market Fund. Shad Stastney, John Succo and Sky Lucas control Vicis Capital LLC equally but disclaim individual ownership of the securities.

 

(38)	Shawn Bergerson has voting and investment control over these securities.

 

(39)

Assumes that any other holders of debentures or any future transferee from any holder does not beneficially own any common stock other than common stock into which the debentures are convertible at the conversion rate of 29.0968 shares of common stock per $1,000 principal amount of the debentures upon maturity.

Only securityholders identified above who beneficially own the securities set forth opposite each such selling securityholder’s name in the foregoing table may sell such securities under the registration statement. Prior to any use of this prospectus in connection with an offering of the debentures and/or the underlying common stock by any holder not identified above, this prospectus will be supplemented to set forth the name and other information about the selling securityholder intending to sell such debentures and the underlying common stock. The prospectus supplement will also disclose whether any securityholder selling in connection with such prospectus supplement has held any position or office with, been employed by, or otherwise had a material relationship with us or any of our affiliates during the three years prior to the date of the prospectus supplement if such information has not been disclosed in this prospectus.

 

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PLAN OF DISTRIBUTION

The selling securityholders and their successors, which includes their transferees, pledgees or donees or their successors, may, from time to time, sell the debentures and the underlying common stock directly to purchasers or through underwriters, broker-dealers or agents who may receive compensation in the form of underwriting discounts, concessions or commissions from the selling securityholders and/or the purchasers of the securities. These discounts, concessions or commissions may be in excess of those customary in the types of transactions involved.

The selling securityholders may sell the debentures and the underlying common stock, from time to time, in one or more transactions at:

 

•

fixed prices;

 

•

prevailing market prices at the time of sale;

 

•

prices related to such prevailing market prices;

 

•

varying prices determined at the time of sale; or

 

•

negotiated prices.

These sales may be effected in transactions (which may involve block transactions) in the following manner:

 

•

on any national securities exchange or quotation service on which the debentures or the underlying common stock may be listed or quoted at the time of sale;

 

•

in the over-the-counter market;

 

•

in transactions otherwise than on such exchanges or services or in the over-the-counter market; or

 

•

through the writing of options, whether such options are listed on option exchanges or otherwise through the settlement of short sales.

These sales may include crosses. Crosses are transactions in which the same broker acts as an agent on both sides of the transaction.

The selling securityholders may also enter into hedging transactions with broker-dealers or other financial institutions in connection with the sales of the debentures or the underlying common stock. These broker-dealers or other financial institutions may in turn engage in short sales of these securities in the course of hedging their positions. The selling securityholders may sell short these securities to close out short positions, or loan or pledge these securities to broker-dealers that, in turn, may sell such securities.

A short sale of the debentures or the underlying common stock by a broker-dealer, financial institution or selling securityholder would involve the sale of such debentures or underlying common stock that are not owned, and therefore must be borrowed, in order to make delivery of the security in connection with such sale. In connection with a short sale of the debentures or the underlying common stock, a broker-dealer, financial institution or selling securityholder may purchase the debentures or our common stock on the open market to cover positions created by short sales. In determining the source of the debentures or shares of common stock to close out such short positions, the broker-dealer, financial institution or selling securityholders may consider, among other things, the price of debentures or shares of common stock available for purchase in the open market.

The aggregate proceeds to the selling securityholders from the sale of the debentures or underlying common stock will be the purchase price of the debentures or common stock less any discounts or commissions. A selling securityholder reserves the right to accept, and together with its agents, to reject (except when we decide to redeem the debentures in accordance with the terms of the indenture) any proposed purchase of debentures or common stock to be made directly or through agents. We will not receive any of the proceeds from this offering.

 

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To comply with certain states’ securities laws, if applicable, the selling securityholders will offer or sell the debentures and the common stock into which the debentures are convertible in such jurisdictions only through registered or licensed brokers-dealers. In addition, in some states the selling securityholders may not sell the debentures and the common stock into which the debentures are convertible unless such securities have been registered or qualified for sale in the applicable state or an exemption from registration or qualification is available and the conditions of which have been satisfied.

Our outstanding common stock is listed for trading on the Nasdaq Global Select Market. Since their initial issuance, the debentures have been eligible for trading on the PORTAL Market of the National Association of Securities Dealers, Inc. However, debentures sold by means of this prospectus supplement will no longer be eligible for trading of the PORTAL Market. We do not intend to list the debentures for trading on any other automated quotation system or any securities exchange.

The selling securityholders and any underwriters, broker-dealers or agents that participate in the distribution of the debentures and underlying common stock may, in connection with these sales, be deemed to be “underwriters” within the meaning of the Securities Act. Any selling securityholder that is a broker-dealer or an affiliate of a broker-dealer will be deemed to be an “underwriter” within the meaning of the Securities Act, unless such selling securityholder purchased its debentures in the ordinary course of business, and at the time of its purchase of the debentures to be resold, did not have any agreements or understandings, directly or indirectly, with any person to distribute the debentures. As a result, any discounts, commissions, concessions or profit they earn on any resale of the debentures or the shares of the underlying common stock may be underwriting discounts and commissions under the Securities Act. Selling securityholders who are deemed to be “underwriters” within the meaning of the Securities Act will be subject to the prospectus delivery requirements of the Securities Act and to certain statutory liabilities, including but not limited to those relating to Sections 11, 12 and 17 of the Securities Act and Rule 10b-5 under the Exchange Act. The selling securityholders have agreed to comply with the prospectus delivery requirements of the Securities Act, if any. To our knowledge, none of the selling securityholders who are broker-dealers or affiliates of broker-dealers, other than the initial purchasers, purchased debentures outside of the ordinary course of business or, at the time of the purchase of the debentures, had any agreements or understandings, directly or indirectly, with any person to distribute the debentures.

The selling securityholders and any other person participating in the sale of the debentures or the underlying common stock will be subject to the Exchange Act. The Exchange Act rules include, without limitation, Regulation M, which may limit the timing of purchases and sales of any of the debentures and the underlying common stock by the selling securityholders and any other such person. In addition, Regulation M of the Exchange Act may restrict the ability of any person engaged in the distribution of the debentures and the underlying common stock to engage in market-making activities with respect to the particular debentures and the underlying common stock being distributed for a period of up to five business days before the commencement of such distribution. This may affect the marketability of the debentures and the underlying common stock and the ability of any person or entity to engage in market-making activities with respect to the debentures and the underlying common stock.

We cannot assure you that any selling securityholder will sell any or all of the debentures or the underlying common stock with this prospectus supplement and the accompanying prospectus. Further, we cannot assure you that any such selling securityholder will not transfer, devise or gift the debentures and the underlying common stock by other means not described in this prospectus supplement and the accompanying prospectus. As a result, there may be, at any time, securities outstanding that are subject to restrictions on transferability and resale. In addition, any securities covered by this prospectus supplement and the accompanying prospectus which qualify for sale pursuant to Rule 144 or Rule 144A under the Securities Act may be sold pursuant to Rule 144 or Rule 144A rather than pursuant to this prospectus supplement and the accompanying prospectus. Each selling securityholder has represented that it will not sell any debentures or common stock pursuant to this prospectus supplement and the accompanying prospectus except as described in this prospectus supplement and the accompanying prospectus.

 

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At the time a particular offering of the debentures or underlying common stock is made, if required, a prospectus supplement, or, if appropriate, a post-effective amendment to the registration statement of which the accompanying prospectus is a part, will be distributed setting forth the names of the selling securityholders, the aggregate amount and type of securities being offered, and, to the extent required, the terms of the offering, including the name or names of any underwriters, broker-dealers or agents, any discounts, commissions and other terms constituting compensation from the selling securityholders and any discounts, commission or concessions allowed or reallowed or paid to the broker-dealers.

To our knowledge, there are currently no plans, arrangements or understandings between any selling securityholder and any underwriter, broker-dealer or agent regarding the sale of debentures and the underlying common stock by the selling securityholders.

Pursuant to the registration rights agreement, all expenses of the registration of debentures and underlying common stock will be paid by us, except that the selling securityholders will pay all underwriting discounts and selling commissions. The selling securityholders and we have agreed to indemnify each other and our respective directors, officers and controlling persons against, and in certain circumstances to provide contribution with respect to, specific liabilities in connection with the offer and sale of the debentures and the common stock, including liabilities under the Securities Act.

The registration rights agreement requires that we use reasonable efforts to keep the shelf registration statement effective until the earliest of (i) the second anniversary of the date of the original issuance of the debentures and (ii) such time as all of the debentures and the common stock issuable on the conversion thereof cease to be outstanding or have either (A) been sold or otherwise transferred pursuant to an effective registration statement, (B) been sold pursuant to Rule 144 under circumstances in which any legend borne by the debentures or common stock relating to restrictions on transferability thereof is removed or (C) become eligible for sale pursuant to Rule 144(k) or any successor provision. Notwithstanding the foregoing obligations, we may, under certain circumstances, postpone or suspend the filing or the effectiveness of the shelf registration statement, or any amendments or supplement thereto, or the sale of the debentures or underlying common stock hereunder. See “Description of Debentures—Registration rights.”

 

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LEGAL MATTERS

Certain legal matters in connection with the offering will be passed upon for us by Fenwick & West LLP, Mountain View, California.

EXPERTS

The consolidated financial statements of VeriSign, Inc. as of December 31, 2006 and 2005, and for each of the years in the three-year period ended December 31, 2006, and management’s assessment of the effectiveness of internal control over financial reporting as of December 31, 2006, have been incorporated by reference herein in reliance upon the report of KPMG LLP, independent registered public accounting firm, incorporated by reference herein, and upon the authority of said firm as experts in accounting and auditing.

The audit report covering the December 31, 2006 consolidated financial statements contains an explanatory note that refers to the Company’s adoption of Statement of Financial Accounting Standards No. 123 (revised 2004), Share-Based Payment, effective January 1, 2006.

The audit report on management’s assessment of the effectiveness of internal control over financial reporting and the effectiveness of internal control over financial reporting as of December 31, 2006, expresses an opinion that VeriSign, Inc. did not maintain effective internal control over financial reporting as of December 31, 2006 because of the effect of a material weakness on the achievement of the objectives of the control criteria and contains an explanatory paragraph that states that the Company identified a material weakness in its internal control over financial reporting as of December 31, 2006 arising from a combination of the following control deficiencies in the Company’s stock administration policies and practices: (1) failure to consistently implement and apply policies and procedures related to the approval of equity-based grants to executive officers, retention grants and grants made in connection with new hires, promotions, and annual performance reviews; (2) lack of complete and timely reconciliation of grants and cancellations from the Company’s stock administration database to its financial reporting systems; lack of consistent reconciliation of grant dates in the system of record to supporting documentation; (3) inadequate supervision and training of personnel involved with the equity-based grant processes; and (4) lack of effective coordination and communication among the Human Resources Department, Accounting Department and Legal Department in connection with the administration of equity-based grants. The control deficiencies resulted in more than a remote likelihood that a material misstatement of the Company’s annual or interim financial statements would not be prevented or detected. A material weakness comprised of similar control deficiencies to those noted above resulted in material errors to, and the restatement of, the 2005 and 2004 annual consolidated financial statements and the condensed consolidated financial statements for the interim periods in 2005 and for the interim period ended March 31, 2006.

The audit report on management’s assessment of the effectiveness of internal control over financial reporting and the effectiveness of internal control over financial reporting as of December 31, 2006, contains an explanatory paragraph that states the Company acquired m-Qube, Inc. (m-Qube) and inCode Telecom Group, Inc. (inCode) on May 1, 2006 and November 30, 2006, respectively, and management excluded from its assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2006 m-Qube’s and inCode’s internal control over financial reporting associated with total assets of $316,131,000 and $89,656,000, respectively, and total revenues of $26,985,000 and $5,000,000, respectively, included in the consolidated financial statements of VeriSign, Inc. and subsidiaries as of and for the year ended December 31, 2006.

 

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INFORMATION INCORPORATED BY REFERENCE

The SEC allows us to incorporate by reference in this prospectus the information in documents we file with the SEC, which means that we can disclose important information to you by referring you to those documents. Any statement contained in any document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded, for purposes of this prospectus, to the extent that a statement contained in or omitted from this prospectus, or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein, modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this prospectus. The following documents filed with the SEC are hereby incorporated by reference in this prospectus:

 

•

Annual report on Form 10-K for the fiscal year ended December 31, 2006.

 

•

Our Definitive Proxy Statement pursuant to Section 14(a) of the Exchange Act, filed with the SEC on July 27, 2007.

 

•

Quarterly reports on Form 10-Q for the quarters ended March 31, 2007 and June 30, 2007.

 

•

Current Reports on Form 8-K dated January 4, 2007, February 2, 2007, March 1, 2007, March 6, 2007, March 9, 2007, May 8, 2007, May 17, 2007, June 1, 2007, July 11, 2007, July 25, 2007, August 13, 2007, August 15, 2007, August 21, 2007, August 30, 2007, September 6, 2007, September 21, 2007 and November 2, 2007.

We hereby undertake to provide without charge to each person, including any beneficial owner, to whom a copy of this prospectus is delivered, upon written or oral request of any such person, a copy of any and all of the reports or documents that have been incorporated by reference in this prospectus, other than exhibits to such documents unless such exhibits have been specifically incorporated by reference thereto. Requests for such copies should be directed to our Investor Relations department, at the following address:

VeriSign, Inc.

487 East Middlefield Road

Mountain View, CA 94043

Attention: Investor Relations

 

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WHERE YOU CAN FIND ADDITIONAL INFORMATION

We file annual, quarterly and current reports and other information with the SEC. You may read and copy any documents we file at the SEC’s Public Reference Room at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. Please call the SEC at (800) SEC-0330 for further information about the public reference room. The SEC also maintains an Internet website that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC. The address of the site is www.sec.gov.

Our Internet address is www.verisign.com. There we make available free of charge, on or through the investor relations section of our website, annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. The information found on our website, other than as specifically incorporated by reference into this prospectus, is not part of this prospectus.

This prospectus constitutes a part of a Registration Statement we filed with the SEC under the Securities Act. This prospectus does not contain all of the information set forth in the Registration Statement, certain parts of which are omitted in accordance with the rules and regulations of the SEC. For further information with respect to us and the shares of common stock offered by this prospectus, reference is hereby made to the Registration Statement. The Registration Statement may be inspected at the public reference facilities maintained by the SEC at the address set forth above. Statements contained herein concerning any document filed as an exhibit are not necessarily complete, and, in each instance, reference is made to the company of such document filed as an exhibit to the Registration Statement. Each such statement is qualified in its entirety by such reference.

 

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$1,250,000,000

3.25% Junior Subordinated Convertible Debentures

due 2037 and 36,371,000 Shares of Common Stock

Issuable Upon Conversion of the Debentures

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PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

 

Item	13. Other Expenses of Issuance and Distribution

The following table sets forth all expenses to be paid by the Registrant, other than estimated underwriting discounts and commissions, in connection with this offering. All amounts shown are estimates except for the SEC registration fee:

 

SEC registration fee		$	38,375
Legal fees and expenses			*
Accounting fees and expenses			*
Printing and other miscellaneous			*
Total			*

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* To be completed by amendment.

 

Item	14. Indemnification of Directors and Officers

Section 145 of the Delaware General Corporation Law authorizes a court to award, or a corporation’s board of directors to grant, indemnity to directors and officers under certain circumstances and subject to certain limitations. The terms of Section 145 of the Delaware General Corporation Law are sufficiently broad to permit indemnification under certain circumstances for liabilities, including reimbursement of expenses incurred, arising under the Securities Act.

As permitted by the Delaware General Corporation Law, the Registrant’s restated certificate of incorporation contains provisions that eliminate the personal liability of its directors for monetary damages for any breach of fiduciary duties as a director, except liability for the following:

 

•

any breach of the director’s duty of loyalty to the Registrant or its stockholders;

 

•

acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law;

 

•

under Section 174 of the Delaware General Corporation Law (regarding unlawful dividends and stock purchases); or

 

•

any transaction from which the director derived an improper personal benefit.

As permitted by the Delaware General Corporation Law, the Registrant’s restated bylaws provide that:

 

•

the Registrant is required to indemnify its directors and executive officers to the fullest extent permitted by the Delaware General Corporation Law, subject to very limited exceptions;

 

•

the Registrant may indemnify its other employees and agents as set forth in the Delaware General Corporation Law;

 

•

the Registrant is required to advance expenses, as incurred, to its directors and executive officers in connection with a legal proceeding to the fullest extent permitted by the Delaware General Corporation Law, subject to very limited exceptions; and

 

•

the rights conferred in the restated bylaws are not exclusive.

The Registrant has entered into or will enter into indemnity agreements with each of its current directors and executive officers to provide these directors and executive officers additional contractual assurances regarding the scope of the indemnification set forth in the Registrant’s restated certificate of incorporation and restated

 

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bylaws and to provide additional procedural protections. At present, except as described in Item 3 of the Registrant’s Annual Report or Form 10-K for the year ended December 31, 2006, there is no pending litigation or proceeding involving a director, executive officer or employee of the Registrant regarding which indemnification is sought. The indemnification provision in the Registrant’s restated certificate of incorporation, restated bylaws and the indemnification agreements entered into between the Registrant and each of its directors and executive officers may be sufficiently broad to permit indemnification of the Registrant’s directors and executive officers for liabilities arising under the Securities Act.

The Registrant currently carries liability insurance for its directors and officers.

Reference is made to the following documents filed as exhibits to this registration statement regarding relevant indemnification provisions described above and elsewhere herein:

 

Exhibit Description		Exhibit Number
Fourth Amended and Restated Certificate of Incorporation of the Registrant		3.01
Second Amended and Restated Bylaws of the Registrant		3.02
Registration Rights Agreement dated as of August 20, 2007 between the Registrant and J.P. Morgan Securities, Inc.		4.04
Form of Revised Indemnification Agreement entered into by the Registrant with each of its directors and executive officers		10.01

 

Item	15. Recent Sales of Unregistered Securities

1. In August 2007, the Registrant issued $1,250,000 aggregate principal amount of 3.25% Junior Subordinated Debentures due 2037 to J.P. Morgan Securities, Inc. The offer and sale of these securities were effected without registration in reliance on the exemption afforded by Section 4(2) of the Securities Act promulgated thereunder.

2. On July 16, 2007, August 1, 2007 and August 24, 2007, the Registrant issued an aggregate of 68,350 shares of common stock to certain directors and executive officers of the Registrant in connection with the vesting of certain restricted stock units issued in 2006 under the Registrant’s 2006 Equity Incentive Plan. The offer and sale of these securities were effected without registration in reliance on the exemption afforded by Regulation D and/or Section 4(2) of the Securities Act promulgated thereunder.

3. On April 6, 2005, the Registrant issued an aggregate of 9,083,074 shares of common stock in connection with the acquisition of LightSurf Technologies, Inc. The offer and sale of these securities were effected without registration in reliance on the exemption afforded by Section 3(a)(10) of the Securities Act. The issuance was approved, after a hearing upon the fairness of the terms and conditions of the transaction, by the California Department of Corporations under authority to grant such approval as expressly authorized by the laws of the State of California.

 

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Item	16. Exhibits and Financial Statement Schedules

(a) Exhibits. The following exhibits are included herein or incorporated herein by reference:

 

		Description		Incorporated by Reference						Filed Herewith
Exhibit Number				Form		Date		Number
2.01		Agreement and Plan of Merger dated as of March 6, 2000, by and among the Registrant, Nickel Acquisition Corporation and Network Solutions, Inc.*		8-K		3/8/00		2.1
2.02		Agreement and Plan of Merger dated September 23, 2001, by and among the Registrant, Illinois Acquisition Corporation and Illuminet Holdings, Inc.		S-4		10/10/01		4.03
2.03		Purchase Agreement dated as of October 14, 2003, as amended, among the Registrant and the parties indicated therein		8-K		12/10/03		2.1
2.04		Sale and Purchase Agreement Regarding the Sale and Purchase of All Shares In Jamba! AG dated May 23, 2004 between the Registrant and certain other named individuals		10-K		3/16/05		2.04
2.05		Asset Purchase Agreement dated October 10, 2005, as amended, among the Registrant, eBay, Inc. and the other parties thereto.		8-K		11/23/05		2.1
3.01		Fourth Amended and Restated Certificate of Incorporation of the Registrant								X
3.02		Second Amended and Restated Bylaws of the Registrant								X
4.01		Rights Agreement dated as of September 27, 2002, between the Registrant and Mellon Investor Services LLC, as Rights Agent, which includes as Exhibit A the Form of Certificate of Designations of Series A Junior Participating Preferred Stock, as Exhibit B the Summary of Stock Purchase Rights and as Exhibit C the Form of Rights Certificate		8-A		9/30/02		4.01
4.02		Amendment to Rights Agreement dated as of February 11, 2003, between the Registrant and Mellon Investor Services LLC, as Rights Agent		8-K/A		3/19/03		4.02
4.03		Indenture dated as of August 20, 2007 between the Registrant and U.S. Bank National Association		8-K/A		9/6/07		4.1
4.04		Registration Rights Agreement dated as of August 20, 2007 between the Registrant and J.P. Morgan Securities, Inc.		8-K/A		9/6/07		4.2
5.01		Opinion of Fenwick & West LLP								X
8.01		Tax opinion of Fenwick & West LLP								X
10.01		Form of Revised Indemnification Agreement entered into by the Registrant with each of its directors and executive officers		10-K		3/31/03		10.02

 

II-3

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		Description		Incorporated by Reference						Filed Herewith
Exhibit Number				Form		Date		Number
10.02		Registrant’s 1995 Stock Option Plan, as amended through 8/6/96		S-1		1/29/98		10.06
10.03		Registrant’s 1997 Stock Option Plan		S-1		1/29/98		10.07
10.04		Registrant’s 1998 Equity Incentive Plan, as amended through 2/8/05		10-K		3/16/05		10.04
10.05		Form of 1998 Equity Incentive Plan Restricted Stock Purchase Agreement		10-Q		11/14/03		10.1
10.06		Form of 1998 Equity Incentive Plan Restricted Stock Unit Agreement		10-K		3/16/05		10.06
10.07		409A Options Election Form and related documentation		8-K		1/4/07		99.01
10.08		Registrant’s 1998 Directors Stock Option Plan, as amended through 5/22/03, and form of stock option agreement		S-8		6/23/03		4.02
10.09		Summary of Director’s Compensation Benefits		10-Q		7/12/07		10.06
10.10		Registrant’s 1998 Employee Stock Purchase Plan, as amended through 1/30/07		10-Q		7/16/07		10.01
10.11		Registrant’s 2001 Stock Incentive Plan, as amended through 11/22/02		10-K		3/31/03		10.08
10.12		Registrant’s 2006 Equity Incentive Plan, as adopted 5/26/06		10-Q		7/12/07		10.02
10.13		Registrant’s 2006 Equity Incentive Plan, form of Stock Option Agreement		10-Q		7/12/07		10.03
10.14		Registrant’s 2006 Equity Incentive Plan, form of Director Stock Option Agreement		10-Q		8/9/07		10.01
10.15		Registrant’s 2006 Equity Incentive Plan, amended form of Director Stock Option Agreement								X
10.16		Registrant’s 2006 Equity Incentive Plan, form of Employee Restricted Stock Unit Agreement		10-Q		7/12/07		10.04
10.17		Registrant’s 2006 Equity Incentive Plan, form of Non-Employee Director Restricted Stock Unit Agreement		10-Q		7/12/07		10.05
10.18		Registrant’s 2006 Equity Incentive Plan, form of Performance-Based Restricted Stock Unit Agreement		8-K		8/30/07		99.1
10.19		Registrant’s 2007 Employee Stock Purchase Plan, as adopted August 30, 2007								X
10.20		Assignment Agreement, dated as of April 18, 1995 between the Registrant and RSA Data Security, Inc.		S-1		1/29/98		10.15
10.21		BSAFE/TIPEM OEM Master License Agreement, dated as of April 18, 1995, between the Registrant and RSA Data Security, Inc., as amended		S-1		1/29/98		10.16

 

II-4

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		Description		Incorporated by Reference						Filed Herewith
Exhibit Number				Form		Date		Number
10.22		Amendment Number Two to BSAFE/TIPEM OEM Master License Agreement dated as of December 31, 1998 between the Registrant and RSA Data Security, Inc.		S-1		1/5/99		10.31
10.23		Non-Compete and Non-Solicitation Agreement, dated April 18, 1995, between the Registrant and RSA Security, Inc.		S-1		1/29/98		10.17
10.24		Microsoft/VeriSign Certificate Technology Preferred Provider Agreement, effective as of May 1, 1997, between the Registrant and Microsoft Corporation*		S-1		1/29/98		10.18
10.25		Master Development and License Agreement, dated as of September 30, 1997, between the Registrant and Security Dynamics Technologies, Inc.*		S-1		1/29/98		10.19
10.26		Amendment Number One to Master Development and License Agreement dated as of December 31, 1998 between the Registrant and Security Dynamics Technologies, Inc.		S-1		1/5/99		10.30
10.27		Transition Services and General Release Agreement between the Registrant and James M. Ulam dated May 18, 2006		10-Q		7/12/07		10.01
10.28		Amended and Restated Transition Services and General Release Agreement between the Registrant and James M. Ulam dated September 27, 2006		10-Q		7/12/07		10.01
10.29		Severance Agreement between the Registrant and Vernon Irvin dated October 31, 2006		8-K		11/6/06		99.01
10.30		Agreement between the Registrant and Judy Lin dated February 16, 2007		10-Q		7/16/07		10.02
10.31		Consulting and Separation Agreement between the Registrant and Stratton D. Sclavos effective July 9, 2007		10-Q		8/9/07		10.03
10.32		Severance and General Release Agreement between the Registrant and Rodney A. McCowan dated July 9, 2007		10-Q		8/9/07		10.04
10.33		Severance and General Release Agreement between the Registrant and Dana L. Evan dated July 27, 2007								X
10.34		Employment Offer Letter between the Registrant and John M. Donovan dated November 20, 2006		10-K		7/12/07		10.25
10.35		Employment Offer Letter between the Registrant and Richard H. Goshorn dated April 25, 2007		10-Q		8/9/07		10.02
10.36		Employment Offer Letter between the Registrant and Anne-Marie Law dated May 2, 2007								X
10.37		Employment Offer Letter between the Registrant and Kevin A. Werner dated September 20, 2007								X
10.38		Employment Offer Letter between the Registrant and Grant L. Clark dated September 20, 2007								X

 

II-5

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		Description		Incorporated by Reference						Filed Herewith
Exhibit Number				Form		Date		Number
10.39		Summary of Compensation Terms between the Registrant and Certain Executive Officers								X
10.40		2006 .com Registry Agreement between VeriSign and ICANN		10-K		7/12/07		10.26
10.41		Amendment No. Thirty (30) to Cooperative Agreement - Special Awards Conditions NCR-92-18742, between the Registrant and U.S. Department of Commerce managers		10-K		7/12/07		10.27
10.42		Deed of Lease between TST Waterview I, L.L.C. and the Registrant, dated as of July 19, 2001		10-Q		11/14/01		10.01
10.43		Accelerated Share Repurchase Transaction at Discount to VWAP dated November 21, 2005 between the Registrant and Morgan Stanley & Co. Incorporated		10-K		3/13/06		10.28
10.44		Confirmation of Accelerated Purchase of Equity Securities dated August 14, 2007 between the Registrant and JP Morgan Securities, Inc. †								X
10.45		Credit Agreement among Registrant and certain of its subsidiaries, the Designated Borrowers named therein, Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer, the other lenders party thereto, Citibank, N.A., as Syndication Agent, JP Morgan Chase Bank, N.A., KeyBank National Association and U.S. Bank National Association, as Co-Documentation Agents, and Banc of America Securities LLC and Citigroup Global Markets, Inc., as Joint Lead Arrangers and Joint Book Managers		8-K		6/7/06		10.1
10.46		Amendment Agreement dated September 17, 2007 by and among Registrant, the several financial institutions thereto and Bank of America, N.A., as Administrative Agent, L/C Issuer and Swing Line Lender		8-K		9/21/07		99.1
10.47		Subsidiary Guaranty dated June 7, 2006, made by the subsidiaries of Registrant named therein in favor of the Lenders party to the Credit Agreement and Bank of America, N.A., as Administrative Agent		8-K		6/7/06		10.1
10.48		Company Guaranty dated June 7, 2006, made by Registrant, in favor of the Lenders party to the Credit Agreement and Bank of America, N.A., as Administrative Agent		8-K		6/7/06		10.1
10.49		Limited Liability Company Agreement by and among Fox US Mobile Holdings, Inc., News Corporation, VeriSign U.S. Holdings, Inc. and US Mobile Holdings, LLC, dated January 31, 2007*		10-Q		7/16/07		10.03
10.50		Form of Change-in-Control and Retention Agreement for Executive Officers		8-K		8/30/07		99.2

 

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		Description		Incorporated by Reference						Filed Herewith
Exhibit Number				Form		Date		Number
10.51		Form of Change-in-Control and Retention Agreement for Chief Executive Officer		8-K		8/30/07		99.3
12.01		Statement Regarding Computation of Ratio of Earnings to Fixed Charges								X
21.01		Subsidiaries of the Registrant		10-K		7/12/07		21.01
23.01		Consent of Independent Registered Public Accounting Firm								X
23.02		Consent of Fenwick & West LLP (contained in Exhibit 5.01)								X
24.01		Powers of Attorney (Included on Page II - 9 as part of the signature pages hereto)								X
25.01		Statement of Eligibility of Trustee on Form T-1 with respect Indenture dated as of August 20, 2007								X

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†	Certain portions of this exhibit have been omitted and have been filed separately with the SEC pursuant to a request for confidential treatment under Rule 24b-2 as promulgated under the Securities Exchange Act of 1934.

*	Confidential treatment was received with respect to certain portions of this agreement. Such portions were omitted and filed separately with the Securities and Exchange Commission.

(b) Financial Statement Schedules. Financial statement schedules are omitted because they are not applicable or the information is included in Registrant’s consolidated financial statements or related notes.

 

Item	17. Undertakings

The undersigned Registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

(i) To include any prospectus required by Section 10(a)(3) of the Securities Act;

(ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement;

(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;

(2) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

 

II-7

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(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

(4) That, for purposes of determining liability under the Securities Act to any purchaser:

(A) Each prospectus filed by the Registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and

(B) Each prospectus required to be filed pursuant to Rule 424(b) as part of a registration statement relating to an offering shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness.

Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date.

(5) To file an application for the purpose of determining the eligibility of the trustee to act under subsection (a) of Section 310 of the Trust Indenture Act in accordance with the rules and regulations prescribed by the Commission under Section 305(b)(2) of the Trust Indenture Act.

(6) Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

 

II-8

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SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Mountain View, State of California, on this 2nd day of November 2007.

 

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints William A. Roper, Jr., Albert E. Clement and Richard H. Goshorn, and each of them, as his true and lawful attorneys-in-fact and agents with full power of substitution, for him in any and all capacities, to sign any and all amendments to this registration statement (including post-effective amendments or any abbreviated registration statement and any amendments thereto filed pursuant to Rule 462(b) increasing the number of securities for which registration is sought), and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully for all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or his or their substitute, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

 

Signature		Title		Date
/S/  WILLIAM A. ROPER, JR. William A. Roper, Jr.		President, Chief Executive Officer and Director (Principal Executive Officer)		November 2, 2007
/S/  ALBERT E. CLEMENT Albert E. Clement		Chief Financial Officer (Principal Financial and Accounting Officer)		November 2, 2007
/S/  D. JAMES BIDZOS D. James Bidzos		Chairman of the Board		October 31, 2007
/S/  WILLIAM L. CHENEVICH William L. Chenevich		Director		October 31, 2007
/S/  MICHELLE GUTHRIE Michelle Guthrie		Director		October 31, 2007
/S/  SCOTT G. KRIENS Scott G. Kriens		Director		November 2, 2007
/S/  ROGER H. MOORE Roger H. Moore		Director		November 1, 2007
/S/  JOHN D. ROACH John D. Roach		Director		November 2, 2007
/S/  LOUIS A. SIMPSON Louis A. Simpson		Director		October 29, 2007

 

II-9

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EXHIBIT INDEX

 

		Description		Incorporated by Reference						Filed Herewith
Exhibit Number				Form		Date		Number
2.01		Agreement and Plan of Merger dated as of March 6, 2000, by and among the Registrant, Nickel Acquisition Corporation and Network Solutions, Inc.*		8-K		3/8/00		2.1
2.02		Agreement and Plan of Merger dated September 23, 2001, by and among the Registrant, Illinois Acquisition Corporation and Illuminet Holdings, Inc.		S-4		10/10/01		4.03
2.03		Purchase Agreement dated as of October 14, 2003, as amended, among the Registrant and the parties indicated therein		8-K		12/10/03		2.1
2.04		Sale and Purchase Agreement Regarding the Sale and Purchase of All Shares In Jamba! AG dated May 23, 2004 between the Registrant and certain other named individuals		10-K		3/16/05		2.04
2.05		Asset Purchase Agreement dated October 10, 2005, as amended, among the Registrant, eBay, Inc. and the other parties thereto.		8-K		11/23/05		2.1
3.01		Fourth Amended and Restated Certificate of Incorporation of the Registrant								X
3.02		Second Amended and Restated Bylaws of the Registrant								X
4.01		Rights Agreement dated as of September 27, 2002, between the Registrant and Mellon Investor Services LLC, as Rights Agent, which includes as Exhibit A the Form of Certificate of Designations of Series A Junior Participating Preferred Stock, as Exhibit B the Summary of Stock Purchase Rights and as Exhibit C the Form of Rights Certificate		8-A		9/30/02		4.01
4.02		Amendment to Rights Agreement dated as of February 11, 2003, between the Registrant and Mellon Investor Services LLC, as Rights Agent		8-K/A		3/19/03		4.02
4.03		Indenture dated as of August 20, 2007 between the Registrant and U.S. Bank National Association		8-K/A		9/6/07		4.1
4.04		Registration Rights Agreement dated as of August 20, 2007 between the Registrant and J.P. Morgan Securities, Inc.		8-K/A		9/6/07		4.2
5.01		Opinion of Fenwick & West LLP								X
8.01		Tax opinion of Fenwick & West LLP								X
10.01		Form of Revised Indemnification Agreement entered into by the Registrant with each of its directors and executive officers		10-K		3/31/03		10.02
10.02		Registrant’s 1995 Stock Option Plan, as amended through 8/6/96		S-1		1/29/98		10.06
10.03		Registrant’s 1997 Stock Option Plan		S-1		1/29/98		10.07
10.04		Registrant’s 1998 Equity Incentive Plan, as amended through 2/8/05		10-K		3/16/05		10.04
10.05		Form of 1998 Equity Incentive Plan Restricted Stock Purchase Agreement		10-Q		11/14/03		10.1

 

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		Description		Incorporated by Reference						Filed Herewith
Exhibit Number				Form		Date		Number
10.06		Form of 1998 Equity Incentive Plan Restricted Stock Unit Agreement		10-K		3/16/05		10.06
10.07		409A Options Election Form and related documentation		8-K		1/4/07		99.01
10.08		Registrant’s 1998 Directors Stock Option Plan, as amended through 5/22/03, and form of stock option agreement		S-8		6/23/03		4.02
10.09		Summary of Director’s Compensation Benefits		10-Q		7/12/07		10.06
10.10		Registrant’s 1998 Employee Stock Purchase Plan, as amended through 1/30/07		10-Q		7/16/07		10.01
10.11		Registrant’s 2001 Stock Incentive Plan, as amended through 11/22/02		10-K		3/31/03		10.08
10.12		Registrant’s 2006 Equity Incentive Plan, as adopted 5/26/06		10-Q		7/12/07		10.02
10.13		Registrant’s 2006 Equity Incentive Plan, form of Stock Option Agreement		10-Q		7/12/07		10.03
10.14		Registrant’s 2006 Equity Incentive Plan, form of Director Stock Option Agreement		10-Q		8/9/07		10.01
10.15		Registrant’s 2006 Equity Incentive Plan, amended form of Director Stock Option Agreement								X
10.16		Registrant’s 2006 Equity Incentive Plan, form of Employee Restricted Stock Unit Agreement		10-Q		7/12/07		10.04
10.17		Registrant’s 2006 Equity Incentive Plan, form of Non-Employee Director Restricted Stock Unit Agreement		10-Q		7/12/07		10.05
10.18		Registrant’s 2006 Equity Incentive Plan, form of Performance-Based Restricted Stock Unit Agreement		8-K		8/30/07		99.1
10.19		Registrant’s 2007 Employee Stock Purchase Plan, as adopted August 30, 2007								X
10.20		Assignment Agreement, dated as of April 18, 1995 between the Registrant and RSA Data Security, Inc.		S-1		1/29/98		10.15
10.21		BSAFE/TIPEM OEM Master License Agreement, dated as of April 18, 1995, between the Registrant and RSA Data Security, Inc., as amended		S-1		1/29/98		10.16
10.22		Amendment Number Two to BSAFE/TIPEM OEM Master License Agreement dated as of December 31, 1998 between the Registrant and RSA Data Security, Inc.		S-1		1/5/99		10.31
10.23		Non-Compete and Non-Solicitation Agreement, dated April 18, 1995, between the Registrant and RSA Security, Inc.		S-1		1/29/98		10.17
10.24		Microsoft/VeriSign Certificate Technology Preferred Provider Agreement, effective as of May 1, 1997, between the Registrant and Microsoft Corporation*		S-1		1/29/98		10.18
10.25		Master Development and License Agreement, dated as of September 30, 1997, between the Registrant and Security Dynamics Technologies, Inc.*		S-1		1/29/98		10.19

 

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		Description		Incorporated by Reference						Filed Herewith
Exhibit Number				Form		Date		Number
10.26		Amendment Number One to Master Development and License Agreement dated as of December 31, 1998 between the Registrant and Security Dynamics Technologies, Inc.		S-1		1/5/99		10.30
10.27		Transition Services and General Release Agreement between the Registrant and James M. Ulam dated May 18, 2006		10-Q		7/12/07		10.01
10.28		Amended and Restated Transition Services and General Release Agreement between the Registrant and James M. Ulam dated September 27, 2006		10-Q		7/12/07		10.01
10.29		Severance Agreement between the Registrant and Vernon Irvin dated October 31, 2006		8-K		11/6/06		99.01
10.30		Agreement between the Registrant and Judy Lin dated February 16, 2007		10-Q		7/16/07		10.02
10.31		Consulting and Separation Agreement between the Registrant and Stratton D. Sclavos effective July 9, 2007		10-Q		8/9/07		10.03
10.32		Severance and General Release Agreement between the Registrant and Rodney A. McCowan dated July 9, 2007		10-Q		8/9/07		10.04
10.33		Severance and General Release Agreement between the Registrant and Dana L. Evan dated July 27, 2007								X
10.34		Employment Offer Letter between the Registrant and John M. Donovan dated November 20, 2006		10-K		7/12/07		10.25
10.35		Employment Offer Letter between the Registrant and Richard H. Goshorn dated April 25, 2007		10-Q		8/9/07		10.02
10.36		Employment Offer Letter between the Registrant and Anne-Marie Law dated May 2, 2007								X
10.37		Employment Offer Letter between the Registrant and Kevin A. Werner dated September 20, 2007								X
10.38		Employment Offer Letter between the Registrant and Grant L. Clark dated September 20, 2007								X
10.39		Summary of Compensation Terms between the Registrant and Certain Executive Officers								X
10.40		2006 .com Registry Agreement between VeriSign and ICANN		10-K		7/12/07		10.26
10.41		Amendment No. Thirty (30) to Cooperative Agreement—Special Awards Conditions NCR-92-18742, between the Registrant and U.S. Department of Commerce managers		10-K		7/12/07		10.27
10.42		Deed of Lease between TST Waterview I, L.L.C. and the Registrant, dated as of July 19, 2001		10-Q		11/14/01		10.01
10.43		Accelerated Share Repurchase Transaction at Discount to VWAP dated November 21, 2005 between the Registrant and Morgan Stanley & Co. Incorporated		10-K		3/13/06		10.28
10.44		Confirmation of Accelerated Purchase of Equity Securities dated August 14, 2007 between the Registrant and JP Morgan Securities, Inc.†								X

 

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		Description		Incorporated by Reference						Filed Herewith
Exhibit Number				Form		Date		Number
10.45		Credit Agreement among Registrant and certain of its subsidiaries, the Designated Borrowers named therein, Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer, the other lenders party thereto, Citibank, N.A., as Syndication Agent, JP Morgan Chase Bank, N.A., KeyBank National Association and U.S. Bank National Association, as Co-Documentation Agents, and Banc of America Securities LLC and Citigroup Global Markets, Inc., as Joint Lead Arrangers and Joint Book Managers		8-K		6/7/06		10.1
10.46		Amendment Agreement dated September 17, 2007 by and among Registrant, the several financial institutions thereto and Bank of America, N.A., as Administrative Agent, L/C Issuer and Swing Line Lender		8-K		9/21/07		99.1
10.47		Subsidiary Guaranty dated June 7, 2006, made by the subsidiaries of Registrant named therein in favor of the Lenders party to the Credit Agreement and Bank of America, N.A., as Administrative Agent		8-K		6/7/06		10.1
10.48		Company Guaranty dated June 7, 2006, made by Registrant, in favor of the Lenders party to the Credit Agreement and Bank of America, N.A., as Administrative Agent		8-K		6/7/06		10.1
10.49		Limited Liability Company Agreement by and among Fox US Mobile Holdings, Inc., News Corporation, VeriSign U.S. Holdings, Inc. and US Mobile Holdings, LLC, dated January 31, 2007*		10-Q		7/16/07		10.03
10.50		Form of Change-in-Control and Retention Agreement for Executive Officers		8-K		8/30/07		99.2
10.51		Form of Change-in-Control and Retention Agreement for Chief Executive Officer		8-K		8/30/07		99.3
12.01		Statement Regarding Computation of Ratio of Earnings to Fixed Charges								X
21.01		Subsidiaries of the Registrant		10-K		7/12/07		21.01
23.01		Consent of Independent Registered Public Accounting Firm								X
23.02		Consent of Fenwick & West LLP (contained in Exhibit 5.01)								X
24.01		Powers of Attorney (Included on Page II - 9 as part of the signature pages hereto)								X
25.01		Statement of Eligibility of Trustee on Form T-1 with respect Indenture dated as of August 20, 2007								X

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†	Certain portions of this exhibit have been omitted and have been filed separately with the SEC pursuant to a request for confidential treatment under Rule 24b-2 as promulgated under the Securities Exchange Act of 1934.

*	Confidential treatment was received with respect to certain portions of this agreement. Such portions were omitted and filed separately with the Securities and Exchange Commission.

 

4

EXHIBIT 3.01

FOURTH AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION

OF

VERISIGN, INC.

a Delaware corporation

ONE: The name of the corporation is VeriSign, Inc. (hereinafter sometimes referred to as the “Corporation”).

TWO: The address of the Corporation’s registered office in the State of Delaware is 1209 Orange Street, in the City of Wilmington, in the County of New Castle. The registered agent in charge thereof is The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801.

THREE: The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware.

FOUR: A. The Corporation is authorized to issue two classes of stock to be designated, respectively, “Common Stock” and “Preferred Stock.” The total number of shares which the Corporation is authorized to issue is One Billion Five Million (1,005,000,000) shares. One Billion (1,000,000,000) shares shall be Common Stock, $0.001 par value per share, and Five Million (5,000,000) shares shall be Preferred Stock, $0.001 par value per share.

B. The Board of Directors is authorized, subject to any limitations prescribed by law, to provide for the issuance of shares of Preferred Stock in series, and by filing a certificate pursuant to the applicable law of the State of Delaware (such certificate being hereinafter referred to as a “Preferred Stock Designation”), to establish from time to time the number of shares to be included in each such series, and to fix the designation, powers, preferences, and rights of each such series and any qualifications, limitations or restrictions thereof. The number of authorized shares of Preferred Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the outstanding shares of Common Stock, without a vote of the holders of the Preferred Stock, or of any series thereof, unless a vote of any such holders is required pursuant to the terms of any Preferred Stock Designation.

FIVE: The following provisions are inserted for the management of the business and the conduct of the affairs of the Corporation, and for further definition, limitation and regulation of the powers of the Corporation and of its directors and stockholders:

A. The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors. In addition to the powers and authority expressly conferred upon them by statute or by this Fourth Amended and Restated Certificate of Incorporation or the Bylaws of the Corporation, the directors are hereby empowered to exercise all such powers and do all such acts and things as may be exercised or done by the Corporation.

B. The directors of the Corporation need not be elected by written ballot unless the Bylaws so provide.

 

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C. Any action required or permitted to be taken by the stockholders of the Corporation must be effected at a duly called annual meeting or special meeting of stockholders of the Corporation and may not be effected by any consent in writing by such stockholders.

D. Special meetings of stockholders of the Corporation may be called only by either the Board of Directors pursuant to a resolution adopted by a majority of the total number of authorized directors (whether or not there exist any vacancies in previously authorized directorships at the time any such resolution is presented to the Board for adoption), the Chief Executive Officer or the President.

SIX: A. The term of office of each director who is in office immediately prior to the closing of the polls for the election of directors at the 2007 Annual Meeting of Stockholders shall remain unchanged. Other than those who may be elected by the holders of Preferred Stock under specified circumstances, commencing with the 2007 Annual Meeting of Stockholders, each director whose term of office expires immediately prior to the closing of the polls for the election of directors at the 2007 Annual Meeting of Stockholders or whose term of office expires thereafter shall be subject to election annually at the annual meeting of stockholders and each director shall hold office until the next succeeding annual meeting of stockholders and until such director’s successor is elected and qualified, except in the case of the death, resignation or removal of any director.

B. Subject to the rights of the holders of any series of Preferred Stock then outstanding, newly created directorships resulting from any increase in the authorized number of directors or any vacancies in the Board of Directors resulting from death, resignation or other cause may be filled (a) by the stockholders at any meeting, (b) by a majority of the directors, although less than a quorum, or (c) by a sole remaining director, and directors so chosen shall hold office for a term expiring at the annual meeting of stockholders at which the term of office to which they have been elected expires, and until their respective successors are elected, except in the case of the death, resignation or removal of any director. No decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent director.

SEVEN: The Corporation shall have a perpetual existence.

EIGHT: A. Exculpation. A director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director’s duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law or (iv) for any transaction from which the director derived any improper personal benefit. If the Delaware General Corporation Law is hereafter amended to further reduce or authorize, with approval of the Corporation’s stockholders, further reductions in the liability of the Corporation’s directors for breach of fiduciary duty, then a director of the Corporation shall not be liable for any such breach to the fullest extent permitted by the Delaware General Corporation Law as so amended.

B. Indemnification. To the extent permitted by applicable law, this Corporation is also authorized to provide indemnification of (and advancement of expenses to) agents (and any other persons to which Delaware law permits this Corporation to provide indemnification) through bylaw provisions, agreements with such agents or other persons, vote of stockholders or disinterested directors or otherwise, in excess of the indemnification and advancement otherwise permitted by Section 145 of the Delaware General Corporation Law, subject only to limits created by applicable Delaware law (statutory or non-statutory), with respect to actions for breach of duty to the Company, its stockholders, and others.

 

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C. Effect of Repeal or Modification. Any repeal or modification of any of the foregoing provisions of this Article Eight shall not adversely affect any right or protection of a director, officer, agent or other person existing at the time of, or increase the liability of any director of the Corporation with respect to any acts or omissions of such director occurring prior to, such repeal or modification.

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

 

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IN WITNESS WHEREOF, the Fourth Amended and Restated Certificate of Incorporation of VeriSign, Inc. has been signed and attested this 30th day of August, 2007.

 

Attest:

 

/s/ RICHARD H. GOSHORN

Richard H. Goshorn

Senior Vice President, General Counsel and Secretary

[SIGNATURE PAGE TO FOURTH AMENDED AND RESTATED CERTIFICATE OF INCORPORATION]

 

4

EXHIBIT 3.02

SECOND AMENDED AND RESTATED

BYLAWS

OF

VERISIGN, INC.

(a Delaware corporation)

(effective August 30, 2007)

ARTICLE I

Stockholders

Section 1. Annual Meeting. An annual meeting of the stockholders of the corporation, for the election of the Directors to succeed those whose terms expire and for the transaction of such other business as may properly come before the meeting, shall be held at such place, on such date and at such time as the Board of Directors shall each year fix.

Section 2. Special Meetings. Special meetings of the stockholders, for any purpose or purposes prescribed in the notice of the meeting, may be called only by (i) the Board of Directors pursuant to a resolution adopted by a majority of the total number of authorized directors (whether or not there exist any vacancies in previously authorized directorships at the time any such resolution is presented to the Board of Directors for adoption), (ii) the Chairman of the Board or (iii) the President and shall be held at such place, on such date, and at such time as they shall fix. Business transacted at special meetings shall be confined to the purpose or purposes stated in the notice.

Section 3. Place of Meetings. All meetings of stockholders shall be held at the principal office of the corporation unless a different place is fixed by the person or persons calling the meeting and stated in the notice of the meeting, or shall not be held at any place but instead shall be held solely by means of remote communication as the Board of Directors, in its sole discretion, may determine.

Section 4. Notices of Meetings and Adjourned Meetings. A notice in writing or by electronic transmission of each annual or special meeting of the stockholders stating the place, date, and hour thereof, shall be given by the Secretary (or the person or persons calling the meeting), not less than 10 nor more than 60 days before the date of the meeting, to each stockholder entitled to vote thereat, by leaving such notice with him or her or at his or her residence or usual place of business, by depositing it postage prepaid in the United States mail, or by sending it by prepaid telegram, telex, overnight express courier, facsimile, electronic mail or other form of electronic transmission, directed to each stockholder at his or her address as it appears on the records of the corporation. Notices of all meetings of stockholders shall state the purpose or purposes for which the meeting is called. An affidavit of the Secretary, Assistant Secretary, or transfer agent of the corporation that the notice has been given shall, in the absence of fraud, be primary facie evidence of the facts stated therein. No notice need be given to any person with whom communication is unlawful or to any person who has waived such notice either (a) in writing (which writing need not specify the business to be transacted at, or the purpose of, the meeting) signed by such person before or after the time of the meeting, (b) by

 

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electronic transmission (which electronic transmission need not specify the business to be transacted at, or the purpose of, the meeting) sent by him or her before or after the time of the meeting or (c) by attending the meeting except for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. When a meeting is adjourned to another time and place, notice need not be given of the adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken except that, if the adjournment is for more than 30 days or if, after the adjournment, a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given in the manner provided in this Section 4.

Without limiting the manner by which notice otherwise may be given effectively to the stockholders, any notice to stockholders given by the corporation under any provision of the Delaware General Corporation Law, the Certificate of Incorporation of the corporation, or these Bylaws shall be effective if given by a form of electronic transmission consented to by the stockholder to whom the notice is given. Any such consent shall be revocable by the stockholder by written notice to the corporation. Any such consent shall be deemed revoked if (a) the corporation is unable to deliver by electronic transmission two consecutive notices given by the corporation in accordance with such consent and (b) such inability becomes known to the Secretary or Assistant Secretary of the corporation or to the transfer agent, or other person responsible for the giving of notice; provided, however, the inadvertent failure to treat such inability as a revocation shall not invalidate any meeting or other action. Notice given pursuant to this Section 4(b) shall be deemed given: (i) if by facsimile telecommunication, when directed to a number at which the stockholder has consented to receive notice; (ii) if by electronic mail, when directed to an electronic mail address at which the stockholder has consented to receive notice; (iii) if by a posting on an electronic network together with separate notice to the stockholder of such specific posting, upon the later of such posting and the giving of such separate notice; and (iv) if by any other form of electronic transmission, when directed to the stockholder.

Section 5. Quorum. At any meeting of the stockholders, a quorum for the transaction of business shall consist of one or more individuals appearing in person or represented by proxy and owning or representing a majority of the shares of the corporation then outstanding and entitled to vote thereat, unless or except to the extent that the presence of a larger number may be required by law (including as required from time to time by the Delaware General Corporation Law or the Certificate of Incorporation of the corporation). Where a separate vote by a class or classes is required, a majority of the shares of such class or classes then outstanding and entitled to vote present in person or by proxy shall constitute a quorum entitled to take action with respect to that vote on that matter. If a quorum shall fail to attend any meeting, the chairman of the meeting or the holders of a majority of the shares of stock entitled to vote thereat who are present, in person or by proxy, may adjourn the meeting to another place, date, or time.

Section 6. Organization. Such person as the Board of Directors may have designated or, in the absence of such a person, the President of the corporation shall call to order any meeting of the stockholders and act as chairman of the meeting. In the absence of the Secretary of the corporation, the secretary of the meeting shall be such person as the chairman appoints.

 

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Section 7. Conduct of Business. The chairman of any meeting of stockholders shall determine the order of business and the procedure at the meeting, including such regulation of the manner of voting and the conduct of discussion as seem to him or her in order.

Section 8. Voting. Unless otherwise provided in the Certificate of Incorporation as currently in effect (the “Certificate of Incorporation”) and subject to the provisions of Section 6 of Article IV hereof, each stockholder shall have one vote for each share of stock entitled to vote held by him or her of record according to the records of the corporation. Persons holding stock in a fiduciary capacity shall be entitled to vote the shares so held. Persons whose stock is pledged shall be entitled to vote unless the pledgor in a transfer on the books of the corporation has expressly empowered the pledgee to vote the pledged shares, in which case only the pledgee or his or her proxy shall be entitled to vote. If shares stand of record in the names of two or more persons or if two or more persons have the same fiduciary relationship respecting the shares then, unless the Secretary is given written notice to the contrary and is furnished with a copy of the instrument or order appointing them or creating the relationship wherein it is so provided to the contrary: (a) if only one votes, his or her act binds all; (b) if more than one vote, the act of the majority so voting binds all; and (c) if more than one vote and the vote is evenly split, the effect shall be as provided by law.

Section 9. Proxies. Each stockholder entitled to vote at a meeting of stockholders may authorize another person or any group of persons to act for him or her by a written or electronic proxy, but no such proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period. A written proxy shall be deemed executed if the stockholder’s name is placed on the proxy (whether by manual signature, typewriting, telegraphic transmission or otherwise) by the stockholder or the stockholder’s attorney-in-fact. An electronic proxy (which may be transmitted via telephone, electronic mail, the Internet or such other electronic means as the Board of Directors may determine from time to time) shall be deemed executed if the corporation receives an appropriate electronic transmission from the stockholder or the stockholder’s attorney-in-fact along with a pass code or other identifier which reasonably establishes the stockholder or the stockholder’s attorney-in-fact as the sender of such transmission.

Section 10. Action at Meeting. When a quorum is present at any meeting, action of the stockholders on any matter properly brought before such meeting, other than the election of directors, shall require, and may be effected by, the affirmative vote of the holders of a majority in interest of the stock present or represented by proxy and entitled to vote on the subject matter, except where a different vote is expressly required by law, the Certificate of Incorporation or these Bylaws, in which case such express provision shall govern and control. The election of directors shall be determined by a plurality of votes cast. If the Certificate of Incorporation so provides, no written ballot or, if authorized by the Board of Directors, ballot submitted by electronic transmission in the manner provided by law, shall be required for the election of directors unless requested by a stockholder present or represented at the meeting and entitled to vote in the election.

Section 11. Stockholder Lists. The officer who has charge of the stock ledger of the corporation shall prepare and make available, at least 10 days before every meeting of stockholders, a complete list of stockholders entitled to vote at the meeting, arranged in

 

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alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least 10 days prior to the meeting, either at a place of inspection within the city where the meeting is to be held (which place of inspection shall be specified in the notice of the meeting) or, if not so specified, at the place where the meeting is to be held, or on a reasonably accessible electronic network as permitted by law (provided that the information required to gain access to the list is provided with the notice of the meeting). Such list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. If the meeting is held solely by means of remote communication, then the list shall be open to the examination of any stockholder during the whole time of the meeting on a reasonably accessible electronic network, and the information required to access the list shall be provided with the notice of the meeting. The stock ledger shall be the only evidence as to who are the stockholders entitled to examine the stock ledger, the list required by this section or the books of the corporation, or to vote in person or by proxy at any meeting of stockholders.

Section 12. Inspectors of Elections.

(a) Applicability. Unless otherwise provided in the Certificate of Incorporation or required by the Delaware General Corporation Law, the following provisions of this Section 12 shall apply only if and when the corporation has a class of voting stock that is: (i) listed on a national securities exchange; (ii) authorized for quotation on an interdealer quotation system of a registered national securities association; or (iii) held of record by more than 2,000 stockholders; in all other cases, observance of the provisions of this Section 12 shall be optional, and at the discretion of the corporation.

(b) Appointment. The corporation shall, in advance of any meeting of stockholders, appoint one or more inspectors of election to act at the meeting and make a written report thereof. The corporation may designate one or more persons as alternate inspectors to replace any inspector who fails to act. If no inspector or alternate is able to act at a meeting of stockholders, the person presiding at the meeting shall appoint one or more inspectors to act at the meeting.

(c) Inspector’s Oath. Each inspector of election, before entering upon the discharge of his duties, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of his ability.

(d) Duties of Inspectors. At a meeting of stockholders, the inspectors of election shall (i) ascertain the number of shares outstanding and the voting power of each share, (ii) determine the shares represented at a meeting and the validity of proxies and ballots, (iii) count all votes and ballots, (iv) determine and retain for a reasonable period of time a record of the disposition of any challenges made to any determination by the inspectors, and (v) certify their determination of the number of shares represented at the meeting, and their count of all votes and ballots. The inspectors may appoint or retain other persons or entities to assist the inspectors in the performance of the duties of the inspectors.

 

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(e) Opening and Closing of Polls. The date and time of the opening and the closing of the polls for each matter upon which the stockholders will vote at a meeting shall be announced by the inspectors at the meeting. No ballot, proxies or votes, nor any revocations thereof or changes thereto, shall be accepted by the inspectors after the closing of the polls unless the Court of Chancery upon application by a stockholder shall determine otherwise.

(f) Determinations. In determining the validity and counting of proxies and ballots, the inspectors shall be limited to an examination of the proxies, any envelopes submitted with those proxies, any information provided in connection with proxies in accordance with Section 212(c)(2) of the Delaware General Corporation Law, ballots and the regular books and records of the Corporation, except that the inspectors may consider other reliable information for the limited purpose of reconciling proxies and ballots submitted by or on behalf of banks, brokers, their nominees or similar persons which represent more votes than the holder of a proxy is authorized by the record owner to cast or more votes than the stockholder holds of record. If the inspectors consider other reliable information for the limited purpose permitted herein, the inspectors at the time they make their certification of their determinations pursuant to this Section 12 shall specify the precise information considered by them, including the person or persons from whom they obtained the information, when the information was obtained, the means by which the information was obtained and the basis for the inspectors’ belief that such information is accurate and reliable.

Section 13. Notice of Stockholder Business; Nominations.

(a) Annual Meeting of Stockholders.

(i) Nominations of persons for election to the Board of Directors and the proposal of business to be considered by the stockholders shall be made at an annual meeting of stockholders (A) pursuant to the corporation^’s notice of such meeting, (B) by or at the direction of the Board of Directors or (C) by any stockholder of the corporation who was a stockholder of record at the time of giving of the notice provided for in this Section 1.13, who is entitled to vote at such meeting and who complies with the notice procedures set forth in this Section 1.13.

(ii) For nominations or other business to be properly brought before an annual meeting by a stockholder pursuant to clause (C) of subparagraph (a)(i) of this Section 1.13, the stockholder must have given timely notice thereof in writing to the Secretary of the corporation and such other business must otherwise be a proper matter for stockholder action. To be timely, a stockholder^’s notice must be delivered to the Secretary at the principal executive offices of the corporation not later than the close of business on the sixtieth (60th) day nor earlier than the close of business on the ninetieth (90th) day prior to the first anniversary of the preceding year’s annual meeting; provided, however, that in the event that the date of the annual meeting is more than thirty (30) days before or more than sixty (60) days after such anniversary date, notice by the stockholder to be timely must be so delivered not earlier than the close of business on the ninetieth (90th) day prior to such annual meeting and not later than the close of business on the later of the sixtieth (60th) day prior to such annual meeting or the close of business on the tenth (10th) day following the day on which public announcement of the date of such meeting is first made by the corporation. Such stockholder’s notice shall set forth: (a) as to

 

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each person whom the stockholder proposes to nominate for election or reelection as a director all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected; (b) as to any other business that the stockholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting and any material interest in such business of such stockholder and the beneficial owner, if any, on whose behalf the proposal is made; and (c) as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made (1) the name and address of such stockholder, as they appear on the corporation’s books, and of such beneficial owner, and (2) the class and number of shares of the corporation that are owned beneficially and held of record by such stockholder and such beneficial owner.

(iii) Notwithstanding anything in the second sentence of subparagraph (a)(ii) of this Section 13 to the contrary, in the event that the number of directors to be elected to the Board of Directors of the corporation is increased and there is no public announcement by the corporation naming all of the nominees for director or specifying the size of the increased board of directors at least seventy (70) days prior to the first anniversary of the preceding year’s annual meeting (or, if the annual meeting is held more than thirty (30) days before or sixty (60) days after such anniversary date, at least seventy (70) days prior to such annual meeting), a stockholder’s notice required by this Section 13 shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the Secretary of the corporation at the principal executive office of the corporation not later than the close of business on the tenth (10th) day following the day on which such public announcement is first made by the corporation.

(b) Special Meetings of Stockholders. Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to the corporation’s notice of such meeting. Nominations of persons for election to the Board of Directors may be made at a special meeting of stockholders at which directors are to be elected pursuant to the corporation’s notice of such meeting (i) by or at the direction of the Board of Directors or (ii) provided that the Board of Directors has determined that directors shall be elected at such meeting, by any stockholder of the Corporation who is a stockholder of record at the time of giving of notice of the special meeting, who shall be entitled to vote at the meeting and who complies with the notice procedures set forth in this Section 13. In the event the Corporation calls a special meeting of stockholders for the purpose of electing one or more directors to the Board of Directors, any such stockholder may nominate a person or persons (as the case may be), for election to such position(s) as specified in the corporation’s notice of meeting, if the stockholder’s notice required by subparagraph (a)(ii) of this Section 13 shall be delivered to the Secretary of the corporation at the principal executive offices of the corporation not earlier than the ninetieth (90th) day prior to such special meeting and not later than the close of business on the later of the sixtieth (60th) day prior to such special meeting or the tenth (10th) day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting.

 

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(c) General.

(i) Only such persons who are nominated in accordance with the procedures set forth in this Section 13 shall be eligible to serve as directors and only such business shall be conducted at a meeting of stockholders as shall have been brought before the meeting in accordance with the procedures set forth in this Section 13. Except as otherwise provided by law or these Bylaws, the chairman of the meeting shall have the power and duty to determine whether a nomination or any business proposed to be brought before the meeting was made or proposed, as the case may be, in accordance with the procedures set forth in this Section 1.12 and, if any proposed nomination or business is not in compliance herewith, to declare that such defective proposal or nomination shall be disregarded.

(ii) For purposes of this Section 13, the term “public announcement” shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the corporation with the Securities and Exchange Commission pursuant to section 13, 14 or 15(d) of the Exchange Act.

(iii) Notwithstanding the foregoing provisions of this Section 13, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth herein. Nothing in this Section 1.12 shall be deemed to affect any rights of stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act.

ARTICLE II

Directors

Section 1. Powers. The business and affairs of the corporation shall be managed by or under the direction of the Board of Directors, which may exercise all such powers of the corporation and do all such lawful acts and things as are not by law or these Bylaws directed or required to be exercised or done by the stockholders.

Section 2. Number of Directors. The Board of Directors shall consist of eleven (11) members. No decrease in the authorized number of directors constituting the Board of Directors shall shorten the term of any incumbent director.

Section 3. Election and Tenure. The term of office of each director who is in office immediately prior to the closing of the polls for the election of directors at the 2007 Annual Meeting of Stockholders shall remain unchanged. Commencing with the 2007 Annual Meeting of Stockholders, each director elected to the Board of Directors at the 2007 Annual Meeting of Stockholders and at each annual meeting of stockholders thereafter, shall hold office until the next succeeding annual meeting of stockholders and shall serve until such director’s successor is elected and qualified, or until such director’s earlier death, resignation or removal.

Section 4. Qualification. No Director need be a stockholder.

 

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Section 5. Removal. Subject to the rights of holders of any series of Preferred Stock then outstanding, any directors, or the entire Board of Directors, may be removed from office at any time, with or without cause, but only by the affirmative vote of the holders of at least a majority of the voting power of all of the then outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class. Vacancies in the Board of Directors resulting from such removal may be filled by a majority of the directors then in office, though less than a quorum, or by the stockholders as provided in Article II, Section 3 above. Directors so chosen shall hold office until the next annual meeting of stockholders.

Section 6. Resignation. Any Director of the corporation may resign at any time by giving written notice to the Board of Directors, to the Chairman of the Board, if any, to the President, or to the Secretary, and any member of a committee may resign therefrom at any time by giving notice as aforesaid or to the chairman or secretary of such committee. Any such resignation shall take effect at the time specified therein, or, if the time be not specified, upon receipt thereof; and unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.

Section 7. Vacancies and Newly Created Directorships. Vacancies and newly created directorships resulting from any increase in the authorized number of Directors may be filled (a) by the stockholders at any meeting, (b) by a majority of the members of the Corporate Governance and Nominating Committee, (c) a majority of the Directors then in office if no such committee exists, or (d) by a sole remaining Director. Whenever the holders of any class or classes of stock or series thereof are entitled to elect one or more Directors by the Certificate of Incorporation, vacancies and newly created directorships of such class or classes or series may be filled by a majority of the Directors elected by such class, classes or series then in office or by the sole remaining director so elected. When one or more Directors shall resign from the Board, effective at a future date, a majority of the members of the Corporate Governance and Nominating Committee shall fill such vacancy or vacancies, or, in the absence of such a committee, a majority of Directors entitled to act on the filling of such vacancy or vacancies, including those who have so resigned, shall have power to fill such vacancy or vacancies by vote to take effect when such resignation or resignations shall become effective.

Section 8. Annual Meeting. The first meeting of each newly elected board may be held without notice immediately after an annual meeting of stockholders (or a special meeting of stockholders held in lieu of an annual meeting) at the same place as that at which such meeting of stockholders was held; or such first meeting may be held at such place and time as shall be fixed by the consent in writing of all the Directors, or may be called in the manner hereinafter provided with respect to the call of special meetings.

Section 9. Regular Meetings. Regular meetings of the Directors may be held at such times and places as shall from time to time be fixed by resolution of the Board, and no notice need be given of regular meetings held at times and places so fixed; provided, however, that any resolution relating to the holding of regular meetings shall remain in force only until the next annual meeting of stockholders and that, if at any meeting of Directors at which a resolution is adopted fixing the times or place or places for any regular meetings any Director is absent, no meeting shall be held pursuant to such resolution without notice to or waiver by such absent Director pursuant to Section 11 of this Article II.

 

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Section 10. Special Meetings. Special meetings of the Directors may be called by the Chairman of the Board, the Lead Independent Director, if any, the President, or by at least one-third of the Directors then in office (rounded up to the nearest whole number), and shall be held at the place and on the date and hour designated in the call thereof.

Section 11. Notices. Notices of any special meeting of the Directors shall be given to each Director by the Secretary or an Assistant Secretary (a) by mailing to him or her, postage prepaid, and addressed to him or her at his or her address as registered on the books of the corporation, or if not so registered at his or her last known home or business address, a written notice of such meeting at least 4 days before the meeting, (b) by delivering such notice by hand or by telegram, telecopy, telex, facsimile, electronic transmission (including electronic mail) or other comparable communication equipment to him or her at least 48 hours before the meeting, addressed to him or her at such address, or (c) by giving such notice in person or by telephone at least 48 hours in advance of the meeting. Any notice given personally or by telephone, telegram, telecopy, telex, facsimile, electronic transmission (including electronic mail) or other comparable communications equipment may be communicated either to the Director or to a person at the office of the Director who the person giving the notice has reason to believe will promptly communicate it to the Director. In the absence of all such officers, such notice may be given by the officer or one of the Directors calling the meeting. Notice need not be given to any Director who has waived notice (a) in writing executed by him or her before or after the meeting and filed with the records of the meeting, (b) by electronic transmission sent by him or her before or after the meeting and filed with the records of the meeting or (c) by attending the meeting except for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. A notice or waiver of notice of a meeting of the Directors need not specify the business to be transacted at or the purpose of the meeting.

Section 12. Quorum. At any meeting of the Directors, a majority of the authorized number of Directors shall constitute a quorum for the transaction of business, provided that a quorum shall not be deemed to exist in the event that a majority of the Directors constituting such quorum are not “independent” as such term is defined under the rules of the Nasdaq Stock Market or other stock exchange upon which the corporation’s common stock is primarily traded (an “Independent Director”). If a quorum shall not be present at any meeting of the Board of Directors, a majority of those present (or, if not more than two Directors are present, any Director present) may adjourn the meeting from time to time to another place, date or time, without notice other than announcement at the meeting prior to adjournment, until a quorum shall be present.

Section 13. Participation in Meetings by Conference Telephone. One or more members of the Board of Directors, or any committee thereof, may participate in a meeting of such Board or committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this Section 13 shall constitute presence in person at such meeting.

 

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Section 14. Conduct of Business: Action by Written Consent. At any meeting of the Board of Directors at which a quorum is present, business shall be transacted in such order and manner as the Board may from time to time determine, and all matters shall be determined by the vote of a majority of the Directors present, except as otherwise provided in these Bylaws or required by law. Action may be taken by the Board of Directors, or any committee thereof, without a meeting if all members of the Board or committee, as the case may be, consent thereto in writing or by electronic transmission (including electronic mail), and the writing or writings or electronic transmission or transmissions (including electronic mail) are filed with the records of proceedings of the Board or committee.

Section 15. Place of Meetings. The Board of Directors may hold its meetings, and have an office or offices, within or without the State of Delaware.

Section 16. Compensation. The Board of Directors shall have the authority to fix stated salaries for Directors for their service in such capacity and to provide for payment of a fixed sum and expenses of attendance, if any, for attendance at each regular or special meeting of the Board. The Board shall also have the authority to provide for payment of a fixed sum and expenses of attendance, if any, payable to members of committees for attending committee meetings. Nothing herein contained shall preclude any Director from serving the corporation in any other capacity and receiving compensation for such services.

Section 17. Committees. The Board of Directors, by resolution passed by a majority of the number of Directors required at the time to constitute a full Board as fixed in or determined pursuant to these Bylaws as then in effect, may from time to time designate one or more committees, each committee to consist of one or more of the Directors of the corporation. The Board may designate one or more Directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or she or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the Board of Directors, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have such power or authority in reference to amending the Certificate of Incorporation (except that a committee may, to the extent authorized in the resolution or resolutions providing for the issuance of shares of stock adopted by the Board of Directors as provided in Subsection (a) of Section 151 of the Delaware General Corporation Law, fix the designations and any preferences or rights of such shares or fix the number of shares in a series of stock or authorize the increase or decrease in the shares of any series), adopting an agreement of merger or consolidation under Sections 251, 252, 254, 255, 256, 257, 258, 263, or 264 of the Delaware General Corporation Law, recommending to the stockholders the sale, lease or exchange of all or substantially all of the corporation’s property or assets, recommending to the stockholders a dissolution of the corporation or a revocation of a dissolution, or amending the Bylaws of the corporation. Such a committee may, to the extent expressly provided in the resolution of the Board of Directors, have the power or authority to declare a dividend or to authorize the issuance of stock or adopt a certificate of ownership and merger pursuant to Section 253 of the Delaware General Corporation Law.

 

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(a) At any meeting of any committee, a majority of the whole committee shall constitute a quorum and, except as otherwise provided by these Bylaws or required by law, the affirmative vote of at least a majority of the members present at a meeting at which there is a quorum shall be the act of the committee.

(b) Each committee, except as otherwise provided by resolution of the Board of Directors, shall fix the time and place of its meetings within or without the State of Delaware, shall adopt its own rules and procedures, and shall keep a record of its acts and proceedings and report the same from time to time to the Board of Directors.

ARTICLE III

Officers

Section 1. Officers and Their Election. The officers of the corporation shall be a Chief Executive Officer, a President, a Secretary, a Chief Financial Officer and such Vice Presidents, Assistant Secretaries, Assistant Chief Financial Officers and other officers as the Board of Directors may from time to time determine and elect or appoint. The Board of Directors may appoint one of its members to the office of Chairman of the Board and another of its members to the office of Vice-Chairman of the Board and from time to time define the powers and duties of these offices notwithstanding any other provisions of these Bylaws. All officers shall be elected by the Board of Directors and shall serve at the will of the Board of Directors. Any officer may, but need not, be a Director. Two or more offices may be held by the same person.

Section 2. Term of Office. The Chief Executive Officer, the President, the Chief Financial Officer and the Secretary shall, hold office until his or her successor is elected and qualified or until his or her earlier resignation or removal.

Section 3. Vacancies. Any vacancy at any time existing in any office may be filled by the Board of Directors.

Section 4. Chairman of the Board. The Board of Directors may, in its discretion, elect a Chairman of the Board from among its members. He or she may be the Chief Executive Officer of the corporation if so designated by the Board, and he or she shall preside at all meetings of the Board of Directors at which he or she is present and shall exercise and perform such other powers and duties as may from time to time be assigned to him or her by the Board of Directors or prescribed by the Bylaws.

Section 5. Lead Independent Director. The Board of Directors may, in its discretion elect a Lead Independent Director from among its members that are Independent Directors. He or she shall preside at all meetings at which the Chairman of the Board is not present and shall exercise such other powers and duties as may from time to time be assigned to him or her by the Board of Directors or as prescribed by the Bylaws.

 

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Section 6. Chief Executive Officer. The Board of Directors may elect a Chief Executive Officer of the corporation who may also be the Chairman of the Board or President of the corporation or both. It shall be his or her duty and he or she shall have the power to see that all orders and resolutions of the Board of Directors are carried into effect and to affix the signature of the corporation to all deeds, conveyances, mortgages, guarantees, leases, obligations, bonds, certificates and other papers and instruments in writing which have been authorized by the Board of Directors or which, in the judgment of the Chief Executive Officer, should be executed on behalf of the corporation; to sign certificates for shares of stock of the corporation; and, subject to the direction of the Board of Directors, to have general charge of the property of the corporation and to supervise and control all officers, agents and employees of the corporation. He or she shall from time to time report to the Board of Directors all matters within his or her knowledge which the interests of the corporation may require to be brought to its notice. The Chief Executive Officer, when present, shall preside at all meetings of the stockholders and, unless there shall be a Chairman of the Board, of the Board of Directors, unless otherwise provided by the Board of Directors.

Section 7. President. If there is no Chief Executive Officer, the President shall be the chief executive officer of the corporation except as the Board of Directors may otherwise provide. The President shall perform such duties and have such powers additional to the foregoing as the Board of Directors shall designate.

Section 8. Vice Presidents. In the absence or disability of the President, his or her powers and duties shall be performed by the vice president, if only one, or, if more than one, by the one designated for the purpose by the Board of Directors. Each vice president shall perform such duties and have such powers additional to the foregoing as the Board of Directors shall designate.

Section 9. Chief Financial Officer. The Chief Financial Officer shall be the treasurer of the corporation and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all monies and other valuable effects in the name and to the credit of the corporation in such depositories as shall be designated by the Board of Directors or in the absence of such designation in such depositories as he or she shall from time to time deem proper. The Chief Financial Officer (or any Assistant Chief Financial Officer) shall sign all stock certificates as treasurer of the corporation. He or she shall disburse the funds of the corporation as shall be ordered by the Board of Directors, taking proper vouchers for such disbursements. He or she shall promptly render to the Chief Executive Officer and to the Board of Directors such statements of his or her transactions and accounts as the Chief Executive Officer and Board of Directors respectively may from time to time require. The Chief Financial Officer shall perform such duties and have such other powers that are commonly incident to the office of chief financial officer and such duties and powers additional to the foregoing as the Board of Directors may designate.

Section 10. Assistant Chief Financial Officers. In the absence or disability of the Chief Financial Officer, his or her powers and duties shall be performed by the Assistant Chief Financial Officer, if only one, or if more than one, by the one designated for the purpose by the Board of Directors. Each Assistant Chief Financial Officer shall perform such duties and have such powers additional to the foregoing as the Board of Directors shall designate.

 

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Section 11. Secretary. The Secretary shall issue notices of all meetings of stockholders, of the Board of Directors and of committees thereof where notices of such meetings are required by law or these Bylaws. He or she shall record the proceedings of the meetings of the stockholders and of the Board of Directors and shall be responsible for the custody thereof in a book to be kept for that purpose. He or she shall also record the proceedings of the committees of the Board of Directors unless such committees appoint their own respective secretaries. Unless the Board of Directors shall appoint a transfer agent and/or registrar, the Secretary shall be charged with the duty of keeping, or causing to be kept, accurate records of all stock outstanding, stock certificates issued and stock transfers. He or she shall sign such instruments as require his or her signature. The Secretary shall have custody of the corporate seal and shall affix and attest such seal on all documents whose execution under seal is duly authorized. In his or her absence at any meeting, an Assistant Secretary or the Secretary pro tempore shall perform his or her duties thereat. He or she shall perform such duties and have such powers additional to the foregoing as the Board of Directors shall designate.

Section 12. Assistant Secretaries. In the absence or disability of the Secretary, his or her powers and duties shall be performed by the Assistant Secretary, if only one, or, if more than one, by the one designated for the purpose by the Board of Directors. Each Assistant Secretary shall perform such duties and have such powers additional to the foregoing as the Board of Directors shall designate.

Section 13. Salaries. The salaries and other compensation of officers, agents and employees shall be fixed from time to time by or under authority from the Board of Directors. No officer shall be prevented from receiving a salary or other compensation by reason of the fact that he or she is also a Director of the corporation.

Section 14. Removal. The Board of Directors may remove any officer, either with or without cause, at any time.

Section 15. Bond. The corporation may secure the fidelity of any or all of its officers or agents by bond or otherwise.

Section 16. Resignations. Any officer, agent or employee of the corporation may resign at any time by giving written notice to the Board of Directors, to the Chairman of the Board, if any, to the Chief Executive Officer or to the Secretary of the corporation. Any such resignation shall take effect at the time specified therein, or, if the time be not specified, upon receipt thereof; and unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.

ARTICLE IV

Capital Stock

Section 1. Stock Certificates: Uncertificated Shares. The shares of capital stock of the corporation shall be represented by certificates, provided that the Board of Directors may provide by resolution or resolutions that some or all of any or all classes or series of its stock may be uncertificated shares. Any such resolution shall not apply to shares represented by a

 

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certificate until such certificate is surrendered to the corporation (or the transfer agent or registrar, as the case may be). Notwithstanding the adoption of such a resolution, every holder of stock represented by certificates and upon request every holder of uncertificated shares shall be entitled to have a certificate signed by, or in the name of, the corporation by the Chairman or Vice-Chairman of the Board of Directors or the President or a Vice President, and by the Chief Financial Officer (in his or her capacity as treasurer) or an Assistant Chief Financial Officer (in his or her capacity as assistant treasurer), or the Secretary or an Assistant Secretary, certifying the number of shares owned by him or her in the corporation. Any or all of the signatures on the certificate may be a facsimile. In case any officer, transfer agent, or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before the certificate is issued, such certificate may nevertheless be issued by the corporation with the same effect as if he or she were such officer, transfer agent or registrar at the date of issue.

Section 2. Classes of Stock. If the corporation shall be authorized to issue more than one class of stock or more than one series of and class, the face or back of each certificate issued by the corporation to represent such class or series shall either (a) set forth in full or summarize the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions thereof, or (b) contain a statement that the corporation will furnish a statement of the same without charge to each stockholder who so requests. Within a reasonable time after the issuance or transfer of uncertificated shares, the corporation shall send to the registered holder thereof such written notice as may be required by law as to the information required by law to be set forth or stated on stock certificates.

Section 3. Transfer of Stock. Shares of stock shall be transferable only upon the books of the corporation pursuant to applicable law and such rules and regulations as the Board of Directors shall from time to time prescribe. The Board of Directors may at any time or from time to time appoint a transfer agent or agents or a registrar or registrars for the transfer or registration of shares of stock. Except where a certificate is issued in accordance with Section 5 of Article IV of these Bylaws, one or more outstanding certificates representing in the aggregate the number of shares involved shall be surrendered for cancellation before a new certificate is issued representing such shares.

Section 4. Holders of Record. Prior to due presentment for registration of transfer the corporation may treat the holder of record of a share of its stock as the complete owner thereof exclusively entitled to vote, to receive notifications and otherwise entitled to all the rights and powers of a complete owner thereof, notwithstanding notice to the contrary.

Section 5. Stock Certificates. The Board of Directors may direct that a new stock certificate or certificates, or uncertificated shares, be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost, stolen, or destroyed upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates, or uncertificated shares, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates or his or her legal representative, to give the corporation a bond sufficient to indemnify it against

 

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any claim that may be made against the corporation on account of the alleged loss, theft, or destruction, of such certificates or the issuance of such new certificate or certificates, or uncertificated shares.

Section 6. Record Date. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders, or to receive payment of any dividend or other distribution or allotment of any rights or to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix a record date, which record date shall not precede the date on which the resolution fixing the record date is adopted and which record date shall not be more than 60 nor less than 10 days before the date of any meeting of stockholders, nor more than 60 days prior to the time for such other action as hereinbefore described; provided, however, that if no record date is fixed by the Board of Directors, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held, and, for determining stockholders entitled to receive payment of and dividend or other distribution or allotment of rights or to exercise any rights of change, conversion or exchange of stock or for any other purpose, the record date shall be at the close of business on the day on which the Board of Directors adopts a resolution relating thereto. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.

ARTICLE V

Miscellaneous Provisions

Section 1. Interested Directors and Officers.

(a) No contract or transaction between the corporation and one or more of its Directors or officers, or between the corporation and any other corporation, partnership, association, or other organization in which one or more of its Directors or officers are Directors or officers, or have a financial interest, shall be void or voidable solely for this reason, or solely because the Director or officer is present at or participates in the meeting of the Board or committee thereof which authorizes the contract or transaction, or solely because his or her or their votes are counted for such purpose, if:

(i) the material facts as to his or her relationship or interest and as to the contract or transaction are disclosed or are known to the Board of Directors or the committee, and the Board or committee in good faith authorizes the contract or transaction by the affirmative vote of a majority of the disinterested Directors, even though the number of disinterested Directors is less than a quorum; or

(ii) the material facts as to his or her relationship or interest and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the shareholders; or

 

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(iii) the contract or transaction is fair as to the corporation as of the time it is authorized, approved or ratified, by the Board of Directors, a committee thereof, or the shareholders.

(b) Common or interested Directors may be counted in determining the presence of a quorum at a meeting of the Board of Directors or of a committee which authorizes the contract or transaction.

Section 2. Indemnification.

(a) Right to Indemnification. The corporation shall indemnify and hold harmless each person who was or is made a party or is threatened to be made a party to or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (hereinafter a “proceeding”), by reason of the fact that he or she is or was a Director or an officer of the corporation or is or was serving at the request of the corporation as a Director, officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to an employee benefit plan (hereinafter an “indemnitee”), whether the basis of such proceeding is alleged action in an official capacity as a director, officer, employee or agent or in any other capacity while serving as a director, officer, to the fullest extent authorized by law, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the corporation to provide broader indemnification rights than such law permitted the corporation to provide prior to such amendment), against all expense, liability and loss (including attorneys’ fees, judgments, fines, ERISA excise taxes or penalties and amounts paid in settlement) reasonably incurred or suffered by such indemnitee in connection therewith; provided, however, that, except as provided in Subsection (c) of this Section with respect to proceedings to enforce rights to indemnification, the corporation shall indemnify any such indemnitee in connection with a proceeding (or part thereof) initiated by such indemnitee only if such proceeding (or part thereof) was authorized by the Board of Directors of the corporation; and provided further that as to any matter disposed of by a compromise payment by such person, pursuant to a consent decree or otherwise, no indemnification either for said payment or for any other expenses shall be provided unless such compromise and indemnification therefore shall be appropriated:

(i) by a majority vote of a quorum consisting of disinterested Directors;

(ii) if such a quorum cannot be obtained, then by a majority vote of a committee of the Board of Directors consisting of all the disinterested Directors;

(iii) if there are not two or more disinterested Directors in office, then by a majority of the Directors then in office, provided they have obtained a written finding by special independent legal counsel appointed by a majority of the Directors to the effect that, based upon a reasonable investigation of the relevant facts as described in such opinion, the person to be indemnified appears to have acted in good faith in the reasonable belief that his or her action was in the best interests of the corporation (or, to the extent that such matter relates to service with respect to an employee benefit plan, in the best interests of the participants or beneficiaries of such employee benefit plan);

 

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(iv) by the holders of a majority of the shares of stock entitled to vote for the election of Directors, which majority may include interested Directors and officers; or

(v) by a court of competent jurisdiction.

An “interested” Director or officer is one against whom in such capacity the proceeding in question or other proceeding on the same or similar grounds is then pending. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he or she reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his or her conduct was unlawful.

(b) Right to Advancement of Expenses. The right to indemnification conferred in Subsection (a) of this Section shall include the right to be paid by the corporation the expenses incurred in defending any such proceeding in advance of its final disposition (hereinafter an “advancement of expenses”); provided, however, that, if the Delaware General Corporation Law requires, an advancement of expenses incurred by an indemnitee in his or her capacity as a director or officer (and not in any other capacity in which service was or is rendered by such indemnitee, including, without limitation, service to an employee benefit plan) shall be made only upon delivery to the corporation of an undertaking (hereinafter an “undertaking”), by or on behalf of such indemnitee, to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right to appeal (hereinafter a “final adjudication”) that such indemnitee is not entitled to be indemnified for such expenses under this Section or otherwise, which undertaking may be accepted without reference to the financial ability of such person to make repayment.

(c) Right of Indemnitee to Bring Suit. If a claim under Subsection (a) or (b) of this Section is not paid in full by the corporation within 60 days after a written claim has been received by the corporation, except in the case of a claim for an advancement of expenses, in which case the applicable period shall be 20 days, the indemnitee may at any time there after bring suit against the corporation to recover the unpaid amount of the claim. If successful_. in whole or in part of any such suit, or in a suit brought by the corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the indemnitee shall be entitled to be paid also the expense of prosecuting or defending such suit. In (i) any suit brought by the indemnitee to enforce a right to indemnification hereunder (but not in a suit brought by the indemnitee to enforce a right to an advancement of expenses) it shall be a defense that, and (ii) any suit by the corporation to recover an advancement of expenses pursuant to the terms of an undertaking the corporation shall be entitled to recover such expenses upon a final adjudication that, the indemnitee has not met any applicable standard for indemnification set forth in the Delaware General Corporation Law. Neither the failure of the corporation (including its Board of Directors, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such suit that indemnification of the indemnitee is proper in the circumstances because the indemnitee has met the applicable standard of conduct set forth in the Delaware General Corporation Law, nor an actual determination by the corporation (including its Board of Directors, independent legal counsel, or its stockholders) that the indemnitee has not met such applicable standard of conduct, shall create a presumption that

 

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the indemnitee has not met the applicable standard of conduct or, in the case of such a suit brought by the indemnitee, be a defense to such suit. In any suit brought by the indemnitee to enforce a right to indemnification or to an advancement of expenses hereunder, or by the corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the burden of proving that the indemnitee is not entitled to be indemnified, or to such advancement of expenses, under this Section or otherwise shall be on the corporation.

(d) Non-exclusivity of Rights. The rights to indemnification and to the advancement of expenses conferred in this Section shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, certificate of incorporation, by-law, agreement, vote of disinterested Directors or otherwise. The corporation’s indemnification under this Section 2 of any person who is or was a Director or officer of the corporation, or is or was serving, at the request of the corporation, as a Director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall be reduced by any amounts such person receives as indemnification (i) under any policy of insurance purchased and maintained on his or her behalf by the corporation, (ii) from such other corporation, partnership, joint venture, trust or other enterprise, or (iii) under any other applicable indemnification provision.

(e) Joint Representation. If both the corporation and any person to be indemnified are parties to an action, suit or proceeding (other than an action or suit by or in the right of the corporation to procure a judgment in its favor), counsel representing the corporation therein may also represent such indemnified person (unless such dual representation would involve such counsel in a conflict of interest in violation of applicable principles of professional ethics), and the corporation shall pay all fees and expenses of such counsel incurred during the period of dual representation other than those, if any, as would not have been incurred if counsel were representing only the corporation; and any allocation made in good faith by such counsel of fees and disbursements payable under this paragraph by the corporation versus fees and disbursements payable by any such indemnified person shall be final and binding upon the corporation and such indemnified person.

(f) Indemnification of Employees and Agents of the Corporation. Except to the extent that rights to indemnification and advancement of expenses of employees or agents of the corporation may be required by any statute, the Certificate of Incorporation, this Section or any other by-law, agreement, vote of disinterested Directors or otherwise, the corporation may, to the extent authorized from time to time by the Board of Directors, grant rights to indemnification and to the advancement of to any employee or agent of the corporation to the fullest extent of the provisions of this Section with respect to the indemnification and advancement of expenses of Directors and officers of the corporation.

(g) Insurance. The corporation may maintain insurance, at its expense, to protect itself and any Director, officer, employee or agent of the corporation or another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss, whether or not the corporation would have the power to indemnify such person against such expense, liability or loss under the Delaware General Corporation Law (as currently in effect or hereafter amended), the corporation^’s Certificate of Incorporation or these Bylaws.

 

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(h) Nature of Indemnification Right: Modification of Repeal of Indemnification. Each person who is or becomes a Director or officer as described in subsection (a) of this Section 2 shall be deemed to have served or to have continued to serve in such capacity in reliance upon the indemnity provided for in this Section 2. All rights to indemnification (and the advancement of expenses) under this Section 2 shall be deemed to be provided by a contract between the corporation and the person who serves as a Director or officer of the corporation at any time while these Bylaws and other relevant provisions of the Delaware General Corporation Law and other applicable law, if any, are in effect. Such rights shall continue as to an indemnitee who has ceased to be a Director, officer, employee or agent and shall inure to the benefit of the indemnitee’s heirs, executors and administrators. Any modification or repeal of this Section 2 shall not adversely affect any right or protection existing under this Section 2 at the time of such modification or repeal.

Section 3. Stock in Other Corporations. Subject to any limitations that may be imposed by the Board of Directors, the President or any person or persons authorized by the Board of Directors may, in the name and on behalf of the corporation, (a) call meetings of the holders of stock or other securities of any corporation or other organization, stock or other securities of which are held by this corporation, (b) act, or appoint any other person or persons (with or without powers of substitution) to act in the name and on behalf of the corporation, or (c) express consent or dissent, as a holder of such securities, to corporate or other action by such other corporation or organization.

Section 4. Checks, Notes, Drafts and Other Instruments. Checks, notes, drafts and other instruments for the payment of money drawn or endorsed in the name of the corporation may be signed by any officer or officers or person or persons authorized by the Board of Directors to sign the same. No officer or person shall sign any such instrument as aforesaid unless authorized by the Board of Directors to do so.

Section 5. Corporate Seal. The seal of the corporation shall be circular in form, bearing the name of the corporation, the word “Delaware”, and the year of incorporation, and the same may be used by causing it or a facsimile thereof to be impressed or affixed or in any other manner reproduced.

Section 6. Books and Records. The books, accounts and records of the corporation, except as may be otherwise required by law, may be kept outside of the State of Delaware, at such place or places as the Board of Directors may from time to time appoint. Except as may otherwise be provided by law, the Board of Directors shall determine whether and to what extent the books, accounts, records and documents of the corporation, or any of them, shall be open to the inspection of the stockholders.

Section 7. Severability. If any term or provision of the Bylaws, or the application thereof to any person or circumstances or period of time, shall to any extent be invalid or unenforceable, the remainder of the Bylaws shall be valid and enforced to the fullest extent permitted by law.

 

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Section 8. Interpretations. Words importing persons include firms, associations and corporations, all words importing the singular number include the plural number and vice versa, and all words importing the masculine gender include the feminine gender.

Section 9. Amendments. The Board of Directors is expressly empowered to adopt, amend or repeal Bylaws of the corporation. Any adoption, amendment or repeal of Bylaws of the corporation by the Board of Directors shall require the approval of a majority of the total number of authorized directors (whether or not there exist any vacancies in previously authorized directorships at the time any resolution providing for adoption, amendment or repeal is presented to the Board of Directors). The stockholders also have power to adopt, amend or repeal the Bylaws of the Corporation. Any adoption, amendment or repeal of Bylaws of the corporation by the stockholders shall require, in addition to any vote of the holders of any class or series of stock of the Corporation required by law or by the Certificate of Incorporation, the affirmative vote of the holders of at least a majority of the voting power of all of the then outstanding shares of the capital stock of the corporation entitled to vote generally in the election of directors, voting together as a single class.

 

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EXHIBIT 5.01

[On Fenwick & West LLP Letterhead]

November 2, 2007

VeriSign, Inc.

487 East Middlefield Road

Mountain View, California 94043-1331

Ladies and Gentlemen:

At your request, we have examined the Registration Statement on Form S-1 (the “Registration Statement”) and the Prospectus filed by VeriSign, Inc., a Delaware corporation (the “Company”), with the Securities and Exchange Commission (the “Commission”) on or about November 2, 2007, pursuant to the Securities Act of 1933, as amended, relating to the resale by the selling securityholders of the Company of an aggregate of $1,250,000,000 of 3.25% Junior Subordinated Convertible Debentures due 2037 (the “Debentures”) and the shares of Company common stock issuable upon the conversion of such Debentures (the “Stock”, and together with the Debentures, the “Securities”) of the Company. All of the Securities are being registered on behalf of certain securityholders of the Company (the “Selling Securityholders”). The Debentures were issued pursuant to the Indenture dated as of August 20, 2007 (the “Indenture”) by and between the Company and U.S. Bank National Association, as trustee.

In rendering this opinion, we have examined such matters of fact as we have deemed necessary in order to render the opinion set forth herein, which included examination of the following:

 

(1)

the Company’s Fourth Amended and Restated Certificate of Incorporation, effective August 30, 2007 (the “Certificate of Incorporation”);

 

(2)

the Company’s Second Amended and Restated Bylaws, effective August 30, 2007;

 

(3)

the Registration Statement, together with the exhibits filed as a part thereof or incorporated therein by reference;

 

(4)

the Preliminary Offering Memorandum, dated August 13, 2007 and the Offering Memorandum, dated August 14, 2007;

 

(5)

the Prospectus prepared in connection with the Registration Statement;

 

(6)

the Indenture, together with the exhibits attached thereto;

 

(7)

the resolutions of the Company’s Board of Directors and the Pricing Committee thereof adopted on August 7, 2007 and August 14, 2007, respectively, approving the filing of the registration statement registering the resale of the Securities that have been provided to us by the Company;

 

(8)

correspondence from Mellon Investor Services, as transfer agent of the Company’s common stock, dated November 1, 2007, listing the issued and outstanding shares of the Company’s common stock as of such date, and lists of options, warrants and other rights issued or issuable by the Company as of the date hereof; and

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VeriSign, Inc.

November 2, 2007

Page 2

 

(9)

an opinion certificate addressed to us and dated of even date herewith executed by the Company containing certain factual representations (the “Opinion Certificate”).

In our examination of documents for purposes of this opinion, we have assumed, and express no opinion as to, the genuineness of all signatures on original documents, the authenticity and completeness of all documents submitted to us as originals, the conformity to originals and completeness of all documents submitted to us as copies, the legal capacity of all persons or entities executing the same, the lack of any undisclosed termination, modification, waiver or amendment to any document reviewed by us and the due authorization, execution and delivery of all such documents, where due authorization, execution and delivery are prerequisites to the effectiveness thereof. We have also assumed that the certificates representing the Stock have been, or will be when issued, properly signed by authorized officers of the Company or their agents.

As to matters of fact relevant to this opinion, we have relied solely upon our examination of the documents referred to above and have assumed the current accuracy and completeness of the information included in the documents referred to above and the representations and warranties made by representatives of the Company to us, including, but not limited to, those set forth in the Opinion Certificate. We have made no independent investigation or other attempt to verify the accuracy of any of such information or to determine the existence or non-existence of any other factual matters.

We are admitted to practice law in the state of California, and this opinion is rendered only with respect to, and no opinion is expressed herein concerning the application or effect of the laws of any jurisdiction other than, (i) the existing laws of the United States of America, (ii) the existing laws of the state of California, (iii) the Delaware General Corporation Law, the Delaware Constitution and reported judicial decisions relating thereto, and (iv) solely with respect to whether or not the Debentures are the valid and binding obligations of the Company, the existing laws of the state of New York. This opinion is limited to such laws, including the rules and regulations of governmental authorities administering such laws, as in effect on the date hereof.

This opinion is qualified by, and is subject to, and we render no opinion with respect to, the following limitations and exceptions to the enforceability of the Debentures:

 

(1)

the effect of the laws of bankruptcy, insolvency, reorganization, arrangement, moratorium, fraudulent conveyance and other similar laws now or hereinafter in effect relating to or affecting the rights and remedies of creditors, including the effect of statutory or other laws regarding fraudulent transfers or preferential transfers;

 

(2)

the effect of general principles of equity and similar principles, including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing, public policy and unconscionability, and the possible unavailability of specific performance, injunctive relief, or other equitable remedies, regardless of whether considered in a proceeding in equity or at law; and

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VeriSign, Inc.

November 2, 2007

Page 3

 

(3)

the effect of laws relating to usury or permissible rates of interest for loans, forebearances or the use of money.

We express no opinion regarding the effectiveness of any waiver of stay, extension or usury laws or of unknown future rights.

The Company has informed us that the Company intends to issue the Stock upon the conversion of the Debentures from time to time on a delayed or continuous basis. This opinion is limited to the laws, including the rules and regulations, as in effect on the date hereof. We are basing this opinion on our understanding that the Company will (a) timely file any and all supplements to the Registration Statement and Prospectus as are necessary to comply with applicable laws in effect from time to time and (b) amend its Certificate of Incorporation to increase the authorized number of shares of its capital stock if the number of such shares to be sold pursuant to the Registration Statement would cause the Company to issue more shares than it has authorized. However, we undertake no responsibility to monitor the Company’s future compliance with applicable laws, rules or regulations of the Commission or other governmental body.

Based upon the foregoing, it is our opinion that:

 

(1)

the Debentures to be sold by the Selling Securityholders pursuant to the Registration Statement are valid and binding obligations of the Company; and

 

(2)

the Stock, when issued upon conversion of the Debentures and in accordance with the terms of the Debentures, the Registration Statement and the Prospectus relating thereto, will be validly issued, fully paid and nonassessable.

We consent to the use of this opinion as an exhibit to the Registration Statement and further consent to all references to us, if any, in the Registration Statement and the Prospectus constituting a part thereof and any amendments thereto. This opinion is intended solely for use in connection with issuance and sale of shares subject to the Registration Statement and is not to be relied upon for any other purpose. We assume no obligation to advise you of any fact, circumstance, event or change in the law or the facts that may hereafter be brought to our attention whether or not such occurrence would affect or modify the opinions expressed herein.

 

 

EXHIBIT 8.01

[Fenwick & West LLP]

November 2, 2007

VeriSign, Inc.

487 East Middlefield Road

Mountain View, CA 94043-1331

 

Re:

VeriSign’s $1,250,000 3.25% Junior Subordinated Convertible Debentures due 2037

Ladies and Gentlemen:

We have acted as counsel to VeriSign, Inc., a Delaware corporation (the “Company”), in connection with the preparation of a Prospectus (the “Prospectus”) and its filing by the Company with the Securities and Exchange Commission (the “Commission”) under the Securities Act of 1933, as amended (the “Securities Act”), relating to the registration of the 3.25% Junior Subordinated Convertible Debentures due 2037 (the “Debentures”) and the associated shares of the Company’s common stock into which the Debentures are convertible.

In connection with this opinion, we have examined and relied upon originals or copies of (i) the Prospectus, (ii) the Offering Memorandum, dated August 14, 2007 (the “Offering Memorandum”), relating to the Debentures, and (iii) such other documents, analyses, and records as we have deemed necessary or appropriate as a basis for the opinion set forth herein. We have also relied upon statements and representations made to us by representatives of the Company. For purposes of this opinion, we have assumed the validity and the initial and continuing accuracy of the documents, analyses, records, statements, and representations referred to above.

In our examination, we have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as copies, and the authenticity of the originals of such latter documents.

On the basis of the statements, representations, qualifications and assumptions contained in the foregoing materials, it is our opinion that the statements in the Prospectus under the caption “Material U.S. federal income tax considerations” insofar as they purport to constitute summaries of matters of United States federal tax law and regulation or legal conclusions with respect thereto, constitute accurate summaries of the matters described therein in all material respects.

This opinion is delivered in accordance with the requirements of Item 601(b)(8) of Regulation S-K under the Securities Act. In rendering our opinion, we have considered the current provisions of the Internal Revenue Code of 1986, as amended, Treasury Department regulations promulgated thereunder, judicial authorities, interpretive rulings of the Internal Revenue Service and such other authorities as we

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VeriSign, Inc.

November 2, 2007

Page 2

have considered relevant, all of which are subject to change or differing interpretations, possibly on a retroactive basis. There can be no assurance that any of the opinions expressed herein will be accepted by the Internal Revenue Service or, if challenged, by a court. Moreover, a change in the authorities or the accuracy or completeness of any of the information, documents, certificates, records, statements, representations, covenants, or assumptions on which our opinion is based could affect our conclusions. This opinion is expressed as of the date hereof, and we are under no obligation to supplement or revise our opinion to reflect any changes (including changes that have retroactive effect) in applicable law or any information, document, certificate, record, statement, representation, covenant or assumption relied upon herein that becomes incorrect or untrue. Except as set forth above, we express no opinion to any party as to the tax consequences, whether federal, state, local or foreign, of the issuance of the Debentures or of any transaction related to or contemplated by such issuance.

This opinion is delivered to you solely for use in connection with the Prospectus and is not to be used, circulated, quoted or otherwise referred to for any other purpose, or relied upon by any other person, without our express written permission. In accordance with the requirements of Item 601(b)(23) of Regulation S-K under the Securities Act, we hereby consent to the filing of this opinion as an exhibit to the Prospectus and to the reference to our firm in the Prospectus. In giving such consent, we do not hereby admit that we are in the category of persons whose consent is required under Section 7 of the Securities Act or the rules or regulations of the Commission thereunder.

 

EXHIBIT 10.15

Grant No.                     

VERISIGN, INC.

2006 EQUITY INCENTIVE PLAN

DIRECTORS NONQUALIFIED STOCK OPTION GRANT

This Stock Option Agreement (this “Agreement”) is made and entered into as of the Date of Grant set forth below (the “Date of Grant”) by and between VeriSign, Inc., a Delaware corporation (the “Company”), and the Optionee named below (“Optionee”). Capitalized terms not defined herein shall have the meaning ascribed to them in the Company’s 2006 Equity Incentive Plan (the “Plan”).

 

Optionee:		_______________________________________
Optionee’s Address:		_______________________________________
Total Option Shares:		_______________________________________
Exercise Price per Share:		_______________________________________
Date of Grant:		_______________________________________
Expiration Date:		_______________________________________
		(unless earlier terminated under Section 3 hereof)

1. Grant of Option. The Company hereby grants to Optionee a nonqualified stock option (this “Option”) to purchase up to the total number of shares of Common Stock of the Company set forth above as Total Option Shares (collectively, the “Shares”) at the Exercise Price Per Share set forth above (the “Exercise Price”), subject to all of the terms and conditions of this Agreement and the Plan.

2. Vesting; Expiration Date.

2.1 Vesting of Shares. This Option shall be exercisable as it vests. Subject to the terms and conditions of the Plan and this Agreement, this Option shall vest and become exercisable as to portions of the Shares as follows: (a) this Option shall not be exercisable with respect to any of the Shares until the first anniversary of the Date of Grant set forth above; (b) provided that Optionee has continuously been a member of the Board since the Date of Grant, this Option shall become exercisable as to 25% of the Shares on the first annual anniversary of the Date of Grant; and (c) provided that Optionee has continuously been a member of the Board since the Date of Grant, this Option shall become exercisable as to an additional 6.25% of the Shares on each quarterly anniversary after the Date of Grant. This Option shall cease to vest upon Optionee no longer being a member of the Board.

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VeriSign, Inc.

Directors Nonqualified Stock Option Agreement

2006 Equity Incentive Plan

2.2 Expiration. This Option shall expire on the Expiration Date set forth above and must be exercised, if at all, on or before the earlier of the Expiration Date or the date on which this Option is earlier terminated in accordance with the provisions of Section 3 hereof.

3. Termination of Option.

3.1 Termination for Any Reason Except Death, Disability. If Optionee ceases to be a member of the Board for any reason except Optionee’s death or Disability then this Option, to the extent (and only to the extent) that it is vested in accordance with the schedule set forth in Section 2.1 hereof on the termination date, may be exercised by Optionee no later than three (3) months after the termination date, but in any event no later than the Expiration Date.

3.2 Termination Because of Death or Disability. If Optionee ceases to be a member of the Board because of death or Disability of Optionee (or the Optionee dies within three (3) months after ceasing to be a member of the Board), then this Option, to the extent that it is vested in accordance with the schedule set forth in Section 2.1 hereof on the termination date, may be exercised by Optionee (or Optionee’s legal representative or authorized assignee) no later than twelve (12) months after the termination date, but in any event no later than the Expiration Date.

4. Manner of Exercise.

4.1 Stock Option Exercise Agreement. To exercise this Option, Optionee (or in the case of exercise after Optionee’s death, Optionee’s executor, administrator, heir or legatee, as the case may be) must deliver to the Company an executed stock option exercise agreement in the form attached hereto as Exhibit A, or in such other form as may be approved by the Company from time to time (the “Exercise Agreement”), which shall set forth, inter alia, Optionee’s election to exercise this Option, the number of shares being purchased, any restrictions imposed on the Shares and any representations, warranties and agreements regarding Optionee’s investment intent and access to information as may be required by the Company to comply with applicable securities laws. If someone other than Optionee exercises this Option, then such person must submit the Exercise Agreement and documentation reasonably acceptable to the Company that such person has the right to exercise this Option.

4.2 Limitations on Exercise. This Option may not be exercised unless such exercise is in compliance with all applicable federal and state securities laws, as they are in effect on the date of exercise.

4.3 Payment. The Exercise Agreement shall be accompanied by full payment of the Exercise Price for the Shares being purchased in cash (by check), or where permitted by law:

(a) by cancellation of indebtedness of the Company to the Optionee;

 

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VeriSign, Inc.

Directors Nonqualified Stock Option Agreement

2006 Equity Incentive Plan

(b) by surrender of shares of the Company’s Common Stock that either: (1) have been paid for within the meaning of SEC Rule 144 (and, if such shares were purchased from the Company by use of a promissory note, such note has been fully paid with respect to such shares); or (2) were obtained by Optionee in the open public market; and in either event are clear of all liens, claims, encumbrances or security interests;

(c) by waiver of compensation due or accrued to Optionee for services rendered to the Company;

(d) provided that a public market for the Company’s Common Stock exists: (1) through a “same day sale” commitment from Optionee and a broker-dealer that is a member of the National Association of Securities Dealers (an “NASD Dealer”) whereby Optionee irrevocably elects to exercise this Option and to sell a portion of the Shares so purchased to pay for the Exercise Price and whereby the NASD Dealer irrevocably commits upon receipt of such Shares to forward the exercise price directly to the Company; or (2) through a “margin” commitment from Optionee and an NASD Dealer whereby Optionee irrevocably elects to exercise this Option and to pledge the Shares so purchased to the NASD Dealer in a margin account as security for a loan from the NASD Dealer in the amount of the Exercise Price, and whereby the NASD Dealer irrevocably commits upon receipt of such Shares to forward the Exercise Price directly to the Company; or

(e) by any combination of the foregoing.

4.4 Tax Withholding. Prior to the issuance of the Shares upon exercise of this Option, Optionee must pay or provide for any applicable federal or state withholding obligations of the Company.

4.5 Issuance of Shares. Provided that the Exercise Agreement and payment are in form and substance satisfactory to counsel for the Company, the Company shall issue the Shares registered in the name of Optionee, Optionee’s authorized assignee, or Optionee’s legal representative, and shall deliver certificates representing the Shares with the appropriate legends affixed thereto. To enforce any restrictions on Optionee’s Shares, the Committee may require Optionee to deposit all certificates, together with stock powers or other instruments of transfer approved by the Committee appropriately endorsed in blank, with the Company or an agent designated by the Company to hold in escrow until such restrictions have lapsed or terminated, and the Committee may cause a legend or legends referencing such restrictions to be placed on the certificates.

5. Compliance with Laws and Regulations. The exercise of this Option and the issuance and transfer of Shares shall be subject to compliance by the Company and Optionee with all applicable requirements of federal and state securities laws and with all applicable requirements of any stock exchange on which the Company’s Common Stock may be listed at the time of such exercise, issuance or transfer. Optionee understands that the Company is under no obligation to register or qualify the Shares with the SEC, any state securities commission or any stock exchange to effect such compliance.

 

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VeriSign, Inc.

Directors Nonqualified Stock Option Agreement

2006 Equity Incentive Plan

6. Nontransferability of Option. This Option may not be transferred in any manner other than under the terms and conditions of the Plan or by will or by the laws of descent and distribution and may be exercised during the lifetime of Optionee only by Optionee. The terms of this Option shall be binding upon the executors, administrators, successors and assigns of Optionee.

7. Tax Consequences. Set forth below is a brief summary as of the date the Board adopted the Plan of some of the federal tax consequences of exercise of this Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. THE COMPANY RECOMMENDS THAT OPTIONEE CONSULT A TAX ADVISOR BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.

7.1 Exercise of Nonqualified Stock Option. There may be a regular federal income tax liability upon the exercise of this Option. Optionee will be treated as having received compensation income (taxable at ordinary income tax rates) equal to the excess, if any, of the fair market value of the Shares on the date of exercise over the Exercise Price. The Company may be required to withhold from Optionee’s compensation or collect from Optionee and pay to the applicable taxing authorities an amount equal to a percentage of this compensation income at the time of exercise.

7.2 Disposition of Shares. If the Shares are held for more than twelve (12) months after the date of the transfer of the Shares pursuant to the exercise of an NQSO, any gain realized on disposition of the Shares will be treated as long-term capital gain. The Company may be required to withhold from Optionee’s compensation or collect from the Optionee and pay to the applicable taxing authorities an amount equal to a percentage of this compensation income.

8. Privileges of Stock Ownership. Optionee shall not have any of the rights of a stockholder with respect to any Shares until the Shares are issued to Optionee.

9. Interpretation. Any dispute regarding the interpretation of this Agreement shall be submitted by Optionee or the Company to the Committee for review. The resolution of such a dispute by the Committee shall be final and binding on the Company and Optionee.

10. Entire Agreement. The Plan is incorporated herein by reference. This Agreement and the Plan and the Exercise Agreement constitute the entire agreement and understanding of the parties hereto with respect to the subject matter hereof and supersede all prior understandings and agreements with respect to such subject matter.

11. Notices. Any notice required to be given or delivered to the Company under the terms of this Agreement shall be in writing and addressed to the Corporate Secretary of the Company at its principal corporate offices. Any notice required to be given or delivered to Optionee shall be in writing and addressed to Optionee at the address indicated above or to such other address as such party may designate in writing from time to time to the Company. All

 

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VeriSign, Inc.

Directors Nonqualified Stock Option Agreement

2006 Equity Incentive Plan

notices shall be deemed to have been given or delivered upon: personal delivery; three (3) days after deposit in the United States mail by certified or registered mail (return receipt requested); one (1) business day after deposit with any return receipt express courier (prepaid); or one (1) business day after transmission by facsimile.

12. Successors and Assigns. The Company may assign any of its rights under this Agreement. This Agreement shall be binding upon and inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer set forth herein, this Agreement shall be binding upon Optionee and Optionee’s heirs, executors, administrators, legal representatives, successors and assigns.

13. Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of California, without regard to that body of law pertaining to choice of law or conflict of law.

14. Acceptance. Optionee hereby acknowledges receipt of a copy of the Plan and this Agreement. Optionee has read and understands the terms and provisions thereof, and accepts this Option subject to all the terms and conditions of the Plan and this Agreement. Optionee acknowledges that there may be adverse tax consequences upon exercise of this Option or disposition of the Shares and that the Company has advised Optionee to consult a tax advisor prior to such exercise or disposition.

[REMAINDER OF PAGE INTENTIONALLY BLANK, SIGNATURE PAGE FOLLOWS]

 

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VeriSign, Inc.

Directors Nonqualified Stock Option Agreement

2006 Equity Incentive Plan

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed in duplicate by its duly authorized representative and Optionee has executed this Agreement in duplicate as of the Date of Grant.

 

VERISIGN, INC.						OPTIONEE
By:
						(Signature)
(Please print name)						(Please print name)
(Please print title)

 

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EXHIBIT A

STOCK OPTION EXERCISE AGREEMENT

Stock Option Exercise Agreement for Directors

 

Optionee Name		Address		Social Security Number

OPTIONS EXERCISED

 

Plan

Grant #

Grant Date

Grant Price Per Share (1)

# of Shares Exercised (2)

Total Option Price (3) (1) x (2) = (3)

PAYMENT METHOD AND ISSUANCE INSTRUCTIONS

TOTAL

 

¨		Cash Exercise						¨		Cashless Exercise
Attached is my check #                      in the amount of $                      to pay for the exercise of my stock options as listed above. Issue the certificate in my name and send it to:								¨		Stock Swap             # of Shares:                                  Cash Due (if applicable): $
				¨		My home address above, or;
				¨		E*Trade Account – Account #

REPRESENTATIONS

 

		I do NOT have access to, nor am I aware of, any inside information regarding VeriSign, Inc. which could or has influenced my decision to purchase and/or sell this stock.
Initials

I hereby agree to hold harmless VeriSign, Inc. regarding the reporting of income subject to the transfer/sale of these shares. I am not relying on VeriSign or E*Trade for any tax advice. The undersigned holder of the stock option(s) described above irrevocably exercises such option(s) as set forth and herewith makes payment therefore, all at the price and on the terms and conditions specified in the stock option agreement(s) pertaining to the option(s) exercised.

IMPORTANT NOTE: FOR CASH EXERCISES

Send your form and attach your check (Payable to: VeriSign, Inc.) to VeriSign, Inc. Attn: Linda Hart, 487 E. Middlefield Rd; Mountain View, CA 94043.

 

Optionee Signature Date
FOR COMPANY USE ONLY		Insider List Verified:
		Stock Administrator Date

EXHIBIT 10.19

VERISIGN, INC.

2007 EMPLOYEE STOCK PURCHASE PLAN

As Adopted August 30, 2007

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VERISIGN, INC.

2007 EMPLOYEE STOCK PURCHASE PLAN

As Adopted August 30, 2007

1. Establishment of Plan. VeriSign, Inc. (the “Company”) proposes to grant options for purchase of the Company’s Common Stock to eligible employees of the Company and its Participating Subsidiaries (as hereinafter defined) pursuant to this Employee Stock Purchase Plan (this “Plan”). For purposes of this Plan, “Parent Corporation” and “Subsidiary” (collectively, “Participating Subsidiaries”) shall have the same meanings as “parent corporation” and “subsidiary corporation” in Sections 424(e) and 424(f), respectively, of the Internal Revenue Code of 1986, as amended (the “Code”). “Participating Subsidiaries” are Parent Corporations or Subsidiaries that the Board of Directors of the Company (the “Board”) designates from time to time as corporations that shall participate in this Plan. The Company intends this Plan to qualify as an “employee stock purchase plan” under Section 423 of the Code (including any amendments to or replacements of such Section), and this Plan shall be so construed. Any term not expressly defined in this Plan but defined for purposes of Section 423 of the Code shall have the same definition herein. A total of [6,000,000] shares of the Company’s Common Stock is reserved for issuance under this Plan. Such number shall be subject to adjustments effected in accordance with Section 14 of this Plan.

2. Purpose. The purpose of this Plan is to provide eligible employees of the Company and Participating Subsidiaries with a convenient means of acquiring an equity interest in the Company through payroll deductions, to enhance such employees’ sense of participation in the affairs of the Company and Participating Subsidiaries, and to provide an incentive for continued employment.

3. Administration. This Plan shall be administered by the Compensation Committee of the Board (the “Committee”). Subject to the provisions of this Plan and the limitations of Section 423 of the Code or any successor provision in the Code, all questions of interpretation or application of this Plan shall be determined by the Committee and its decisions shall be final and binding upon all participants. Members of the Committee shall receive no compensation for their services in connection with the administration of this Plan, other than standard fees as established from time to time by the Board for services rendered by Board members serving on Board committees. All expenses incurred in connection with the administration of this Plan shall be paid by the Company.

4. Eligibility. Any employee of the Company or the Participating Subsidiaries is eligible to participate in an Offering Period (as hereinafter defined) under this Plan except the following:

(a) employees who are not employed by the Company or Participating Subsidiaries ten (10) days before the beginning of such Offering Period;

(b) employees who are customarily employed for twenty (20) hours or less per week;

(c) employees who, together with any other person whose stock would be attributed to such employee pursuant to Section 424(d) of the Code, own stock or hold options to purchase stock possessing five percent (5%) or more of the total combined voting power or value of all classes of stock of the Company or any of its Participating Subsidiaries or who, as a result of being granted an option under this Plan with respect to such Offering Period, would own stock or hold options to purchase stock possessing five percent (5%) or more of the total combined voting power or value of all classes of stock of the Company or any of its Participating Subsidiaries; and

(d) individuals who provide services to the Company or any of its Participating Subsidiaries as independent contractors who are reclassified as common law employees for any reason except for federal income and employment tax purposes.

5. Offering Periods. The offering periods of this Plan (each, an “Offering Period”) shall be of twenty-four (24) months duration commencing on February 1 and August 1 of each year and ending on January 31 and July 31 of each year; provided, however, that the first such Offering Period shall commence on August 1, 2007 (the “First Offering Date”) and shall end on July 31, 2009. Each Offering Period shall consist of four (4) six-month purchase periods (individually, a “Purchase Period”) during which payroll deductions of the participants are accumulated under this Plan. Unless determined otherwise by the Committee with respect to a particular Offering Period, each Purchase Period shall run from February 1 or August 1 to the next succeeding July 31 or January 31 as the case may

 

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be. If the Committee determines that purchases shall not be made on a Purchase Date, then the Committee may, but need not, modify the length of subsequent Purchase Periods and/or add additional Purchase Periods as it may determine in its discretion. The first business day of each Offering Period is referred to as the “Offering Date”. The last business day of each Purchase Period is referred to as the “Purchase Date”. The Committee shall have the power to change the duration of Offering Periods or Purchase Periods as it may deem necessary or desirable in its sole discretion.

6. Participation in this Plan. Eligible employees may become participants in an Offering Period under this Plan on the first Offering Date after satisfying the eligibility requirements by delivering a subscription agreement in the form specified by the Company not later than such Offering Date unless a later time for filing the subscription agreement authorizing payroll deductions is set by the Committee for all eligible employees with respect to a given Offering Period. An eligible employee who does not deliver a subscription agreement by such date after becoming eligible to participate in such Offering Period shall not participate in that Offering Period and shall only be permitted to participate in any subsequent Offering Period by delivering such a subscription agreement not later than the Offering Date of such subsequent Offering Period. Notwithstanding the foregoing, participants in any offering period under the Company’s 1998 Employee Stock Purchase Plan (the “1998 Plan”) shall, on termination of such offering period under the 1998 Plan (including for this purpose, a termination due to the operation of Section 11(c) of the 1998 Plan), automatically be enrolled in the first Offering Period to commence thereafter at the same contribution levels as respectively last elected under the 1998 Plan. Once an employee becomes a participant in an Offering Period, such employee will automatically participate in the Offering Period commencing immediately following the last day of the prior Offering Period unless the employee withdraws or is deemed to withdraw from this Plan or terminates further participation in the Offering Period as set forth in Section 11 below. Such participant is not required to file any additional subscription agreement in order to continue participation in this Plan.

7. Grant of Option on Enrollment. Enrollment by an eligible employee in this Plan with respect to an Offering Period will constitute the grant (as of the Offering Date) by the Company to such employee of an option to purchase on the Purchase Date up to that number of shares of Common Stock of the Company determined by dividing (a) the amount accumulated in such employee’s payroll deduction account during such Purchase Period by (b) the lower of (i) eighty-five percent (85%) of the fair market value of a share of the Company’s Common Stock on the Offering Date (but in no event less than the par value of a share of the Company’s Common Stock), or (ii) eighty-five percent (85%) of the fair market value of a share of the Company’s Common Stock on the Purchase Date (but in no event less than the par value of a share of the Company’s Common Stock), provided, however, that the number of shares of the Company’s Common Stock subject to any option granted pursuant to this Plan shall not exceed the lesser of (a) the maximum number of shares set by the Committee pursuant to Section 10(c) below with respect to the applicable Purchase Date, or (b) the maximum number of shares which may be purchased pursuant to Section 10(b) below with respect to the applicable Purchase Date. The fair market value of a share of the Company’s Common Stock shall be determined as provided in Section 8 hereof.

8. Purchase Price. The purchase price per share at which a share of Common Stock will be sold in any Offering Period shall be eighty-five percent (85%) of the lesser of:

(a) The Fair Market Value on the Offering Date; or

(b) The Fair Market Value on the Purchase Date.

For purposes of this Plan, the term “Fair Market Value” means, as of any date, the value of a share of the Company’s Common Stock determined as follows:

(i) if such Common Stock is publicly traded and is then listed on a national securities exchange (for example, the Nasdaq Global Market), its closing price on the date of determination on the principal national securities exchange on which the Common Stock is listed or admitted to trading as reported in The Wall Street Journal;

(ii) if such Common Stock is publicly traded but is not listed or admitted to trading on a national securities exchange, the average of the closing bid and asked prices on the date of determination as reported in The Wall Street Journal; or

(iii) if none of the foregoing is applicable, by the Board in good faith.

 

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9. Payment Of Purchase Price; Changes In Payroll Deductions; Issuance Of Shares.

(a) The purchase price of the shares may be accumulated by regular payroll deductions made during each Offering Period or, when authorized by the Committee, the purchase price of the shares may be paid by a lump sum payment. The deductions are made as a percentage of the participant’s compensation in one percent (1%) increments not less than two percent (2%) nor greater than twenty-five percent (25%) or such higher or lower limit set by the Committee. Compensation shall mean base salary, commissions, bonuses, incentive compensation and shift premiums; provided, however, that for purposes of determining a participant’s compensation, any election by such participant to reduce his or her regular cash remuneration under Sections 125 or 401(k) of the Code shall be treated as if the participant did not make such election. Payroll deductions shall commence on the first payday of the Offering Period and shall continue to the end of the Offering Period unless sooner altered or terminated as provided in this Plan.

(b) A participant may decrease or increase the rate of payroll deductions during an Offering Period by delivering a new authorization for payroll deductions, in the form specified by the Company, in which case the new rate shall become effective for the next payroll period commencing more than fifteen (15) days after the Company’s receipt of the authorization and shall continue for the remainder of the Offering Period unless changed as described below. Such change in the rate of payroll deductions may be made at any time during an Offering Period, but not more than two (2) changes may be made effective during any Purchase Period. A participant may increase or decrease the rate of payroll deductions for any subsequent Offering Period by delivering a new authorization, in the form specified by the Company, for payroll deductions not later than fifteen (15) days before the beginning of such Offering Period.

(c) All payroll deductions made for a participant are credited to his or her account under this Plan and are deposited with the general funds of the Company. No interest accrues on the payroll deductions. All payroll deductions received or held by the Company may be used by the Company for any corporate purpose, and the Company shall not be obligated to segregate such payroll deductions.

(d) On each Purchase Date of an Offering Period, so long as this Plan remains in effect, and provided that the participant has not withdrawn from that Offering Period, then unless the Committee has previously notified participants that no purchase of Common Stock shall occur on such Purchase Date, the Company shall apply the funds then in the participant’s account to the purchase of whole shares of Common Stock reserved under the option granted to such participant with respect to the Offering Period to the extent that such option is exercisable on the Purchase Date. The purchase price per share shall be as specified in Section 8 of this Plan. Any cash remaining in a participant’s account after such purchase of shares shall be refunded to such participant in cash, without interest; provided, however that any amount remaining in such participant’s account on a Purchase Date which is less than the amount necessary to purchase a full share of Common Stock of the Company shall be carried forward, without interest, into the next Purchase Period or Offering Period, as the case may be. In the event that this Plan has been oversubscribed, all funds not used to purchase shares on the Purchase Date shall be returned to the participant, without interest. No Common Stock shall be purchased on a Purchase Date on behalf of any employee whose participation in this Plan has terminated prior to such Purchase Date.

(e) As promptly as practicable after the Purchase Date, the Company shall issue shares for the participant’s benefit representing the shares purchased upon exercise of his or her option.

(f) During a participant’s lifetime, such participant’s option to purchase shares hereunder is exercisable only by him or her. The participant will have no interest or voting right in shares covered by his or her option until such option has been exercised.

10. Limitations on Shares to be Purchased.

(a) No participant shall be entitled to accrue the right to purchase stock under this Plan at a rate which, when aggregated with his or her rights to purchase stock under all other employee stock purchase plans of the Company or any Subsidiary, exceeds $25,000 in fair market value, determined as of the Offering Date (or such other limit as may be imposed by the Code) for each calendar year in which the employee participates in this Plan. The Company shall automatically suspend the payroll deductions of any participant as necessary to enforce such limit provided that when the Company automatically resumes such payroll deductions, the Company must apply the rate in effect immediately prior to such suspension.

 

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(b) If the Fair Market Value of a share on a Purchase Date is less than half of eighty-five percent (85%) of the Fair Market Value of a share on the Offering Date then the maximum number of shares that may be purchased by any employee on such Purchase Date shall not exceed the number (the “Maximum Share Amount”) obtained by dividing eighty-five percent (85%) of the Fair Market Value of a share on the Offering Date into fifty percent (50%) of such participant’s eligible compensation to be paid during the Offering Period (as determined on the Offering Date). Prior to the commencement of any Offering Period, the Committee may, in its sole discretion, set a new maximum number of shares which may be purchased by any employee at any single Purchase Date and such number shall be the Maximum Share Amount for all Offering Periods to which it is to apply.

(c) No participant shall be entitled to purchase shares on a Purchase Date if the Committee determines there shall be no purchase of shares on such Purchase Date (whether due to the requirements of Section 23 of the Plan or as the Committee may otherwise deem necessary or desirable). If the Committee makes such a determination, then contributions accumulated during the Purchase Period ending on such Purchase Date shall be refunded (without interest unless otherwise determined by the Committee) to participants, but such participants, notwithstanding the provisions of Section 11(b), shall continue to be participants in the Offering Period of which such Purchase Period is a part unless the automatic enrollment provisions of Section 11(c) are otherwise applicable.

(d) If the number of shares to be purchased on a Purchase Date by all employees participating in this Plan exceeds the number of shares then available for issuance under this Plan, then the Company will make a pro rata allocation of the remaining shares in as uniform a manner as shall be reasonably practicable and as the Committee shall determine to be equitable. In such event, the Company shall give written notice of such reduction of the number of shares to be purchased under a participant’s option to each participant affected thereby.

(e) Any payroll deductions accumulated in a participant’s account which are not used to purchase stock due to the limitations in this Section 10 shall be returned to the participant as soon as practicable after the end of the applicable Purchase Period, without interest unless otherwise determined by the Committee.

11. Withdrawal.

(a) Each participant may withdraw from an Offering Period under this Plan by signing and delivering a written notice to that effect on a form specified by the Company. Such withdrawal may be elected at any time at least fifteen (15) days prior to the end of an Offering Period.

(b) Upon withdrawal from this Plan, the accumulated payroll deductions shall be returned to the withdrawn participant, without interest, and his or her interest in this Plan shall terminate. In the event a participant voluntarily elects to withdraw from this Plan, he or she may not resume his or her participation in this Plan during the same Offering Period, but he or she may participate in any Offering Period under this Plan which commences on a date subsequent to such withdrawal by filing a new authorization for payroll deductions in the same manner as set forth above for initial participation in this Plan.

(c) If the purchase price on the first day of any current Offering Period in which a participant is enrolled is higher than the purchase price on the first day of any subsequent Offering Period, the Company will automatically enroll such participant in the subsequent Offering Period. Except with respect to the first Offering Period, any funds accumulated in a participant’s account prior to the first day of such subsequent Offering Period will be applied to the purchase of shares on the Purchase Date immediately prior to the first day of such subsequent Offering Period. With respect to the first Offering Period, any funds accumulated in a participant’s account prior to the first day of such subsequent Offering Period will be applied to the purchase of shares on the Purchase Date next following the first day of such subsequent Offering Period. A participant does not need to file any forms with the Company to automatically be enrolled in the subsequent Offering Period

12. Termination of Employment. Termination of a participant’s employment for any reason, including retirement, death or the failure of a participant to remain an eligible employee of the Company or of a Participating Subsidiary, immediately terminates his or her participation in this Plan. In such event, the payroll deductions credited to the participant’s account will be returned to him or her or, in the case of his or her death, to his or her legal representative, without interest. For purposes of this Section 12, an employee will not be deemed to have

 

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terminated employment or failed to remain in the continuous employ of the Company or of a Participating Subsidiary in the case of sick leave, military leave, or any other leave of absence approved by the Board; provided that such leave is for a period of not more than ninety (90) days or reemployment upon the expiration of such leave is guaranteed by contract or statute.

13. Return of Payroll Deductions. In the event a participant’s interest in this Plan is terminated by withdrawal, termination of employment or otherwise, or in the event this Plan is terminated by the Board, the Company shall promptly deliver to the participant all payroll deductions credited to such participant’s account. No interest shall accrue on the payroll deductions of a participant in this Plan.

14. Capital Changes.

(a) Subject to any required action by the stockholders of the Company, the number of shares of Common Stock covered by each option under this Plan which has not yet been exercised and the number of shares of Common Stock which have been authorized for issuance under this Plan but have not yet been placed under option (collectively, the “Reserves”), as well as the price per share of Common Stock covered by each option under this Plan which has not yet been exercised, shall be proportionately adjusted for any increase or decrease in the number of issued and outstanding shares of Common Stock of the Company resulting from a stock split or the payment of a stock dividend (but only on the Common Stock) or any other increase or decrease in the number of issued and outstanding shares of Common Stock effected without receipt of any consideration by the Company; provided, however, that conversion of any convertible securities of the Company shall not be deemed to have been “effected without receipt of consideration”. Such adjustment shall be made by the Committee, whose determination shall be final, binding and conclusive. Except as expressly provided herein, no issue by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares of Common Stock subject to an option.

(b) In the event of the proposed dissolution or liquidation of the Company, the Offering Period will terminate immediately prior to the consummation of such proposed action, unless otherwise provided by the Committee. The Committee may, in the exercise of its sole discretion in such instances, declare that this Plan shall terminate as of a date fixed by the Committee and give each participant the right to purchase shares under this Plan prior to such termination. In the event of (i) a merger or consolidation in which the Company is not the surviving corporation (other than a merger or consolidation with a wholly-owned subsidiary, a reincorporation of the Company in a different jurisdiction, or other transaction in which there is no substantial change in the stockholders of the Company or their relative stock holdings and the options under this Plan are assumed, converted or replaced by the successor corporation, which assumption will be binding on all participants), (ii) a merger in which the Company is the surviving corporation but after which the stockholders of the Company immediately prior to such merger (other than any stockholder that merges, or which owns or controls another corporation that merges, with the Company in such merger) cease to own their shares or other equity interest in the Company, (iii) the sale of substantially all of the assets of the Company or (iv) the acquisition, sale, or transfer of more than 50% of the outstanding shares of the Company by tender offer or similar transaction, the Plan shall continue for all Offering Periods which began prior to the transaction and shares will be purchased based on the fair market value of the surviving corporation’s stock on each Purchase Date (taking into account the exchange ratio, where necessary).

(c) The Committee may, if it so determines in the exercise of its sole discretion, also make provision for adjusting the Reserves, as well as the price per share of Common Stock covered by each outstanding option, in the event that the Company effects one or more reorganizations, recapitalizations, rights offerings or other increases or reductions of shares of its outstanding Common Stock, or in the event of the Company being consolidated with or merged into any other corporation.

15. Nonassignability. Neither payroll deductions credited to a participant’s account nor any rights with regard to the exercise of an option or to receive shares under this Plan may be assigned, transferred, pledged or otherwise disposed of in any way (other than by will, the laws of descent and distribution or as provided in Section 22 hereof) by the participant. Any such attempt at assignment, transfer, pledge or other disposition shall be void and without effect.

16. Reports. Individual accounts will be maintained for each participant in this Plan. Each participant shall receive promptly after the end of each Purchase Period a report of his or her account setting forth the total payroll deductions accumulated, the number of shares purchased, the per share price thereof and the remaining cash balance, if any, carried forward to the next Purchase Period or Offering Period, as the case may be.

 

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17. Notice of Disposition. Each participant shall notify the Company if the participant disposes of any of the shares purchased in any Offering Period pursuant to this Plan if such disposition occurs within two (2) years from the Offering Date or within one (1) year from the Purchase Date on which such shares were purchased (the “Notice Period”). Unless such participant is disposing of any of such shares during the Notice Period, such participant shall keep the certificates representing such shares in his or her name (and not in the name of a nominee) during the Notice Period. The Company may, at any time during the Notice Period, place a legend or legends on any certificate representing shares acquired pursuant to this Plan requesting the Company’s transfer agent to notify the Company of any transfer of the shares. The obligation of the participant to provide such notice shall continue notwithstanding the placement of any such legend on the certificates.

18. No Rights to Continued Employment. Neither this Plan nor the grant of any option hereunder shall confer any right on any employee to remain in the employ of the Company or any Participating Subsidiary, or restrict the right of the Company or any Participating Subsidiary to terminate such employee’s employment.

19. Equal Rights And Privileges. All eligible employees shall have equal rights and privileges with respect to this Plan so that this Plan qualifies as an “employee stock purchase plan” within the meaning of Section 423 or any successor provision of the Code and the related regulations. Any provision of this Plan which is inconsistent with Section 423 or any successor provision of the Code shall, without further act or amendment by the Company, the Committee or the Board, be reformed to comply with the requirements of Section 423. This Section 19 shall take precedence over all other provisions in this Plan.

20. Notices. All notices or other communications by a participant to the Company under or in connection with this Plan shall be deemed to have been duly given when received in the form specified by the Company at the location, or by the person, designated by the Company for the receipt thereof.

21. Term; Stockholder Approval. After this Plan is adopted by the Board, this Plan will become effective on the date that is the First Offering Date (as defined above). This Plan shall be approved by the stockholders of the Company, in any manner permitted by applicable corporate law, within twelve (12) months before or after the date this Plan is adopted by the Board. No purchase of shares pursuant to this Plan shall occur prior to such stockholder approval. This Plan shall continue until the earlier to occur of (a) termination of this Plan by the Board (which termination may be effected by the Board at any time), (b) issuance of all of the shares of Common Stock reserved for issuance under this Plan, or (c) ten (10) years from the adoption of this Plan by the Board.

22. Designation of Beneficiary.

(a) A participant may file a written designation of a beneficiary who is to receive any shares and cash, if any, from the participant’s account under this Plan in the event of such participant’s death subsequent to the end of an Purchase Period but prior to delivery to him of such shares and cash. In addition, a participant may file a written designation of a beneficiary who is to receive any cash from the participant’s account under this Plan in the event of such participant’s death prior to a Purchase Date.

(b) Such designation of beneficiary may be changed by the participant at any time by written notice. In the event of the death of a participant and in the absence of a beneficiary validly designated under this Plan who is living at the time of such participant’s death, the Company shall deliver such shares or cash to the executor or administrator of the estate of the participant, or if no such executor or administrator has been appointed (to the knowledge of the Company), the Company, in its discretion, may deliver such shares or cash to the spouse or to any one or more dependents or relatives of the participant, or if no spouse, dependent or relative is known to the Company, then to such other person as the Company may designate.

23. Conditions Upon Issuance of Shares; Limitation on Sale of Shares. Shares shall not be issued with respect to an option unless the exercise of such option and the issuance and delivery of such shares pursuant thereto shall comply with all applicable provisions of law, domestic or foreign, including, without limitation, the Securities Act, the Securities Exchange Act of 1934, the rules and regulations promulgated thereunder, and the requirements of any stock exchange or automated quotation system upon which the shares may then be listed, and shall be further subject to the approval of counsel for the Company with respect to such compliance.

 

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24. Applicable Law. The Plan shall be governed by the substantive laws (excluding the conflict of laws rules) of the State of California.

25. Amendment or Termination of this Plan. The Board may at any time amend, terminate or extend the term of this Plan, except that any such termination cannot affect options previously granted under this Plan, nor may any amendment make any change in an option previously granted which would adversely affect the right of any participant, nor may any amendment be made without approval of the stockholders of the Company obtained in accordance with Section 21 hereof within twelve (12) months of the adoption of such amendment (or earlier if required by Section 21) if such amendment would:

(a) increase the number of shares that may be issued under this Plan; or

(b) change the designation of the employees (or class of employees) eligible for participation in this Plan.

 

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EXHIBIT 10.33

Dana Evan

[Address]

July 27, 2007

Dear Dana:

This Severance & General Release Agreement (the “Agreement”) acknowledges your resignation from your position of Chief Financial Officer of VeriSign, Inc. (“VeriSign” or the “Company”) and from all positions that you held as an officer or employee of VeriSign or any of its subsidiaries or joint ventures effective as the Termination Date (defined below) and confirms that your employment with VeriSign was terminated effective as of July 10, 2007 (the “Termination Date”).

In an effort to assist you with your transition and to ensure an amicable and smooth separation, and contingent upon your acceptance of the terms and conditions of this Agreement, VeriSign hereby offers you the package described below.

To accept this Agreement, you will need to sign below where indicated in front of a witness, have the witness sign where indicated and then return the signed Agreement to VeriSign within twenty-one (21) calendar days. The date that is twenty-two (22) calendar days after the date you or your attorney are presented with this Agreement is referred to in this Agreement as the “Acceptance Expiration Date.” You have seven (7) calendar days following your return of the executed Agreement (the “Revocation Period”) to revoke your acceptance of it. If, during the Revocation Period, you decide that you would like to revoke your acceptance of this Agreement then revocation must be made by delivering written notice of your revocation to Attention: General Counsel, VeriSign, Inc., 21351 Ridgetop Circle, Dulles, Virginia 20166, and must be received no later than the seventh day after you return the signed Agreement.

1. Consulting. From the day after the Termination Date to December 31, 2007 (the “Consulting Period”), you will make yourself available to provide consulting services to VeriSign, performing such tasks as may be assigned by the VeriSign Board of Directors (the “Board”) and/or the Chief Executive Officer, including without limitation those related to litigation, investigations or other matters. VeriSign will pay you a fee of $10,000 per month (the “Consulting Fee”) in arrears for such consulting services. During the Consulting Period, VeriSign will provide you with secretarial support and administrative services as reasonably necessary to perform the consulting services for VeriSign.

During the Consulting Period, (i) you will be an independent contractor, not a VeriSign employee; (ii) you will not be eligible to participate in any of the benefits programs offered by VeriSign to its employees, except to the extent that you may be eligible to continue benefits coverage under COBRA; and (iii) you will not have authority to enter into any commitment on

 

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behalf of any VeriSign Company. For the purposes of this Agreement, “VeriSign Company” means VeriSign or any of its subsidiaries or joint ventures to which it or its subsidiaries are a party.

2. Additional Consideration from VeriSign. In consideration for the covenants and promises herein and provided you accept and remain in compliance with the terms and conditions of this Agreement, you will be provided with the following benefits:

2.1 Severance. VeriSign will pay you a severance in the total amount of $672,000 (the “Severance Payment”), which shall be payable in two installments, as described below.

VeriSign will pay you the first installment of the Severance Payment, which shall be in the amount of $450,240 within thirty days of the Effective Date of this Agreement, provided you are then in full compliance with your obligations under this Agreement. For the purposes of this Agreement, “Effective Date” means the eighth day after you return the signed Agreement to VeriSign, provided you return the signed Agreement before the Acceptance Expiration Date and then do not revoke your acceptance of this Agreement during the Revocation Period.

VeriSign will pay you the second installment of the Severance Payment, which shall be in the amount of $221,760 on the one year anniversary of the Termination Date, provided that you are then in full compliance with your obligations under this Agreement, including without limitation your obligations under Section 8 and 9 of this Agreement.

You agree that the Severance Payment is not required by contract or under the Company’s normal policies and procedures, and is provided as a severance solely in connection with this Agreement, and that you are not entitled to any payments from the company or the other persons and entities released by this Agreement other than as set forth in this Agreement.

2.2 Annual Bonuses.

(a) 2006 Bonus. You will receive $252,000 as full payment of your annual corporate bonus for 2006 (the “2006 Bonus”) within thirty (30) days of the Effective Date of this Agreement.

(b) 2007 Bonus. Subject to the terms and conditions for payment of corporate bonuses generally applicable to employees for services rendered in 2007 (other than the requirement that you be employed by VeriSign on the bonus payment date), you will be eligible to receive a portion of your bonus for 2007 (the “2007 Bonus”) to be pro-rated as of the Termination Date. Payment of the 2007 Bonus will be contingent upon your full compliance with your obligations under this Agreement, including without limitation your obligations under Sections 8 and 9 below of this Agreement, at the time VeriSign issues 2007 corporate bonuses to its employees.

For the purpose of clarification, your Target Bonus amount for 2007 is sixty percent (60%) of your annual base salary. Your current annual base salary is $420,000. Therefore, if the Termination Date is July 10, 2007 then the maximum amount that you will receive as the 2007 Bonus will be $131,040 (calculated as follows: ($420,000 * .6) * (191/365) = $131,040).

 

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The exact amount of the 2007 Bonus that you will receive will be determined by VeriSign based on the performance of both the company and your division (Corporate). The payment of the 2007 Bonus, if any, will be made at the time that VeriSign issues 2007 bonuses to its employees, which will be no later than March 15, 2008.

2.3 COBRA Premiums. VeriSign also will make a payment to you within thirty (30) days of the Effective Date in the amount of $22,632 which is the equivalent of 18 months’ of COBRA premiums (consistent with your current coverage levels). You will need to apply for COBRA if you would like to extend your benefits coverage beyond the Termination Date.

2.4 Life Insurance. In addition, within thirty (30) days of the Effective Date, VeriSign will provide you with a payment in the amount of $2,211, which is the equivalent of 18 months’ of life insurance premiums (consistent with your current coverage levels). You will need to contact your life insurance provider if you want to maintain your life insurance policy beyond the Termination Date.

2.5 Stock Options, RSU’s And RSA’s.

(a) Existing Grants. Attached as Exhibit A to this Agreement is a list of your options to purchase shares of common stock of VeriSign, Inc., restricted stock units (“RSU’s”) of VeriSign, Inc. and restricted stock awards (“RSA’s”) of VeriSign, Inc., each in the amounts, received on the grant dates and with the exercise prices (for stock options only) as reflected in Exhibit A. You agree that, except as reflected in Exhibit A you have no rights to VeriSign stock options, restricted stock units or restricted stock awards. Except as may be expressly modified in this Agreement, all VeriSign stock options, RSU’s and RSA’s may be exercised only in accordance with the terms of the applicable stock option plans, notices of grant and option or RSU or RSA agreements.

(b) Stock Option Acceleration. As of the Effective Date, and subject to compliance with applicable law and any stock option exercise limitation imposed by the Board, you will receive acceleration of vesting of twenty-five percent (25%) of your unvested stock options as of the Termination Date to purchase shares of VeriSign common stock for which the Fair Market Value is greater than the Exercise Price on the Termination Date. For the purposes of the Agreement, the term “Fair Market Value” means the closing price per share of VeriSign common stock on The Nasdaq Global Select Market. For the purpose of this Agreement, the term “Exercise Price” means the exercise price of the VeriSign stock options as specified in Exhibit A. The 25% of your unvested stock options that will be subject to accelerated vesting will be those options that have the lowest Exercise Price as set forth in Exhibit B attached hereto.

Notwithstanding anything else stated in any applicable stock option plan, you may exercise your vested VeriSign, Inc. stock options for up to six (6) months following the Termination Date.

As you know, VeriSign had imposed a stock option exercise suspension in connection with the Board’s review of VeriSign’s stock option grants. The Board subsequently passed a resolution extending the post termination exercise period of options to the 45^th day after the stock option exercise suspension is lifted. Pursuant to the Board’s resolution, you will have at least forty-five (45) days after the suspension is lifted to choose to exercise your options. If your then

 

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remaining post termination exercise period is greater than forty-five (45) days from the date the option exercise suspension is lifted then the remaining longer portion of your post termination exercise period will apply (e.g. If your Termination Date is June 30, 2007 and if the Board lifts the exercise suspension on July 30, 2007 then you will have until December 30, 2007 to exercise your vested options provided you accept the terms and conditions of this Agreement). As of the Termination Date, you will no longer be subject to the black out periods for exercise and/or sale which you had as an officer of the Company, provided that you are not in possession of material nonpublic information.

All other options which are not vested as of the Termination Date will expire immediately on the Termination Date. If you have questions about this you can contact David Pomponio, Vice President of Compensation at (703) 948-3415. Please make sure that you provide your current mailing address and e-mail address to Mr. Pomponio so that you can be notified of when the option exercise suspension is lifted.

(c) RSU Acceleration. As of the Effective Date, and subject to compliance with applicable law, you will receive acceleration of vesting of twenty-five percent (25%) of your unvested restricted stock units (“RSU’s”) of VeriSign common stock as of the Termination Date. Exhibit B reflects which RSU’s will be subject to acceleration of vesting.

All other RSU’s which are not vested as of the Termination Date will expire immediately on the Termination Date.

(d) Potential Exercise Price Adjustments. If the Board or the ad hoc group of directors that performed the options review determines in good faith within ninety (90) days from the Termination Date, based on information not available to it on the Termination Date, that the Exercise Price of any of your VeriSign stock options should be increased based on your conduct relating to option granting practices then the Exercise Price of any such VeriSign stock options shall be increased to the price so determined by the Board or ad hoc group of directors and, with respect to any exercised options, you agree to repay to the Company in cash the difference between such increased price and the exercise price that you paid. This Section 2.5(d) is subject to your right to challenge any such determination by the Board or ad hoc group of directors in an arbitration proceeding as described in Section 12.2 below.

2.6 Full Payment. On or around the Termination Date, you will receive your final salary payment and payment for any hours of Paid Time Off (“PTO”) that you may have accrued but not used as of the Termination Date. Except as expressly stated above, and except for any expenses that may be reimbursed to you pursuant to Section 4(a) below, you shall not be entitled to any other or further compensation, remuneration, reimbursement payments, options, stock, or other equity issue of or from VeriSign or any VeriSign Party (defined at Section 3 below). By executing this Agreement, you are acknowledging and agreeing that, once the above noted payments have been made, you will have received all payments from VeriSign for the work you have performed for VeriSign or any VeriSign Party through the Termination Date and acknowledge and agree that VeriSign and the VeriSign Parties do not owe you any more money, compensation or benefits for any hours you worked through the Termination Date or under any and all other severance, change of control or other agreements that you may have or have had with the Company, any of its subsidiaries, affiliates or joint ventures, whether written, oral or implied.

 

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3. Release of Claims. In consideration for the above benefits and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, your signature below indicates your agreement as follows:

3.1 General Release. In keeping with our intent to allow for an amicable separation, and as part of our accord, and deeming this Agreement to be fair, reasonable, and equitable, and intending to be legally bound hereby, you agree to and hereby do, for yourself and for each of your heirs, executors, administrators and assigns, forever and irrevocably fully release and discharge VeriSign (including any subsidiary or affiliated entities, or any joint ventures to which VeriSign or any of its subsidiaries is a party and all of their respective officers, directors, employees, agents, insurance carriers, auditors, accountants, attorneys, representatives, shareholders, predecessors, successors, purchasers, assigns, and representatives) (collectively the “VeriSign Parties”) from any and all grievances, liens, suits, judgments, claims, demands, debts, defenses, actions or causes of action, obligations, damages, and liabilities whatsoever which you now have, have had, or may have, whether the same be known or unknown, at law, in equity, or mixed, in any way arising out of or relating in any way to any matter, act, occurrence, or transaction that occurred before or as of the Termination Date, including but not limited to your employment with VeriSign and your separation from VeriSign. This is a General Release. This General Release is a material inducement for the Company to enter into this Agreement. You expressly acknowledge that this General Release includes, but is not limited to, your release of any tort and contract claims, arbitration claims, claims under any local, state or federal law, wage and hour law, wage collection law or labor relations law, and any claims of discrimination or harassment on the basis of age, race, sex, sexual orientation, religion, disability, national origin, ancestry, citizenship, retaliation or any other claim of employment discrimination or retaliation, and any claims under the Civil Rights Acts of 1964 and 1991 as amended (42 U.S.C. §§ 2000e et seq.), the Age Discrimination In Employment Act (the “ADEA”) (29 U.S.C. §§ 621 et seq.), Executive Order 11141, the Americans With Disabilities Act (42 U.S.C. §§ 12101 et seq.), the Rehabilitation Act of 1973 (29 U.S.C. §§ 701 et seq.), the Employee Retirement Income Security Act of 1974, as amended, 29 U.S.C. § 1001 et seq., the Worker Adjustment and Retraining Notification Act, the Older Workers Benefit Protection Act, the Family and Medical Leave Act (29 U.S.C. §§ 2601 et seq.), the Fair Labor Standards Act (29 U.S.C. §§ 201 et seq.), the Equal Pay Act of 1963, 29 U.S.C 206 and any other claim under any law prohibiting employment discrimination, harassment or relating to employment, including without limitation any applicable state law counterpart of any of the foregoing, including the California Fair Employment and Housing Act, the California Family Rights Act and claims under the California Labor Code. This General Release also includes, without limitation, your release of all claims for wrongful termination, constructive termination, violation of public policy, breach of any express or implied contract, breach of any implied covenant, fraud, intentional or negligent misrepresentation, emotional distress, defamation, slander or any other claims related to your relationship with any VeriSign Parties.

 

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You hereby knowingly waive any and all rights you have or may have under Section 1542 of the California Civil Code. Section 1542 provides as follows:

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.

Notwithstanding Section 1542 of the Civil Code of California, you expressly consent that this Agreement shall be given full force and effect according to each and all of its expressed terms and provisions, including as well those relating to unknown claims, charges, demands, suits, actions, causes of action and debts, if any. You acknowledge that you understand the significance and consequence of this specific waiver of Section 1542. You understand that this Agreement is not an admission of liability under any statute or otherwise by VeriSign, and that VeriSign does not admit but denies any violation of your legal rights.

You represent that you are not aware of any possible claims by you other than the claims that you have waived and released by this Agreement. You acknowledge that you have been advised of your right to consult with legal counsel and expressly agree to waive any rights you may have to any claims, whether the facts or basis for any cause of action are known or unknown as of the Effective Date of this Agreement, and acknowledge such waiver under any common law principle or statute which may govern waivers of such claims. You represent that you have no lawsuits, claims, or actions pending in your name, or on behalf of any other person or entity, against VeriSign or any VeriSign Party, and that if, unbeknownst to you, such a complaint, charge or lawsuit has been filed on your behalf, you will immediately cause it to be withdrawn and dismissed. You further represent that you have no known workplace injuries or occupational diseases.

You also represent that you do not intend to bring any claims on behalf of any other person or entity against VeriSign or any other VeriSign Party. You agree that you will not counsel or assist any attorneys or their clients in the presentation or prosecution of any disputes, differences, grievances, claims, charges, or complaints by any third party against VeriSign and/or any VeriSign Party, unless under a government agency request, subpoena or other court order to do so. You further agree both to immediately notify VeriSign upon receipt of any court order, subpoena, document or any legal discovery device that requests your involvement in any way in any legal matter concerning VeriSign or that seeks or might require the disclosure or production of the existence or terms of this Agreement or of any confidential, proprietary or trade secret information of VeriSign or any VeriSign Company, and to furnish, within three (3) business days of its receipt, a copy of such subpoena or legal discovery device to VeriSign’s General Counsel in accordance with Section 12.7 below.

The only claims that this Agreement does not release are: (i) a claim to enforce this Agreement subject to the terms and conditions of this Agreement; (ii) claims for unemployment compensation or any state disability insurance benefits pursuant to the terms of applicable state law; (iii) claims to continued participation in certain of the Company’s group benefit plans pursuant to the terms and conditions of COBRA; or (iv) the right to bring to the attention of the Equal Employment Opportunity Commission claims of discrimination; provided however that you do release the right to secure any damages for alleged discriminatory treatment. You hereby promise that you will not pursue any claim that you have settled by this Agreement. You agree that if you break this promise, you will pay all of VeriSign’s costs and expenses (including reasonable attorneys’ fees) related to the defense of any claims.

 

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3.2 OWBPA Notice. In accordance with the Older Workers Benefit Protection Act, you acknowledge that you are waiving and releasing any rights you may have under the Age Discrimination in Employment Act and that this waiver and release are knowing and voluntary. You further acknowledge that: (i) this Agreement is written in a manner that is understandable to you; (ii) the waiver and release of claims under the ADEA contained in this Agreement does not cover rights or claims that may arise after the date on which you sign this Agreement; (iii) this Agreement provides for consideration in addition to anything of value to which you are already entitled; (iv) you are advised that you may consult with an attorney prior to executing this Agreement; (v) you have been granted twenty-one (21) days after being presented with this Agreement to decide whether or not to sign it and that if you sign this Agreement before the expiration of such period you do so voluntarily after having had the opportunity to consult with an attorney and hereby waive the remainder of the twenty-one (21) days period; (vi) any changes to this Agreement, whether material or immaterial, will not re-start the running of the twenty-one (21) day acceptance period; (vii) you have seven (7) calendar days following the date you return the signed Agreement to revoke your acceptance of this Agreement; and (viii) this Agreement shall not be effective until the Revocation Period has expired.

You acknowledge that the consideration given for this waiver and release Agreement is in addition to anything of value to which you were already entitled and is not an employment benefit. You acknowledge that the amounts to be paid by VeriSign under this Agreement are adequate consideration for your execution of this Agreement and for any and all outstanding obligations that may be owed to you by VeriSign.

3.3 Cooperation. You agree to make yourself available upon reasonable notice from VeriSign or its attorneys to provide testimony through declarations, affidavits, depositions or at a hearing or trial, and to work with VeriSign in preparation for such event, and to cooperate with any other reasonable request by VeriSign in connection with the defense or prosecution of any lawsuit to which a VeriSign Company is a party currently pending or filed after the Termination Date.

You agree to reasonably cooperate with the Company in connection with the investigation of the Securities and Exchange Commission, the U.S. Attorney and the Internal Revenue Service relating to the Company’s historical option granting practices and with any review by the Company, its Board of Directors or any ad hoc group thereof.

If VeriSign so requests your cooperation in connection with any legal matter then VeriSign agrees to pay for any reasonable expenses, such as economy class airfare or lodging, that you incur in connection with assisting VeriSign, provided you notify VeriSign in advance of what your reasonable expenses are expected to be and receive prior written approval from VeriSign for such expenses.

4. Business Expenses.

(a) Business Expense Reimbursements. Please submit any expense reports you may have for travel or business related expenses that you incurred during your employment with

 

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VeriSign for reimbursement within thirty (30) days after the Termination Date. All valid expense reports that are properly submitted will be paid on the regular expense cycle, subject to the terms and conditions of the VeriSign Travel and Expense Reimbursement Policy (the “Expense Reimbursement Policy”).

(b) Repayment of Certain Expense Reimbursements. You agree that you will repay the Company promptly upon request for any expense reimbursements that were made to you by the Company to the extent that the Audit Committee of the Board of Directors, in good faith, determines that such expense reimbursements either exceeded the amounts permitted under the Company’s Expense Reimbursement Policy or were not reimbursable expenses under the Company’s Expense Reimbursement Policy (collectively the “Unapproved Expenses”). If such determination is made before all of the payments payable to you under this Agreement are paid to you then the Company may deduct such Unapproved Expenses from the payments that would otherwise be due to you under this Agreement.

5. Transition And Return of Company Property.

You agree that from the date you receive this Agreement through the Termination Date you will cooperate in performing work related tasks that may be reasonably requested of you by VeriSign and you acknowledge that, in its discretion, VeriSign may relieve you from performing all work related tasks even before the Termination Date.

You agree to return to VeriSign either on the Termination Date or on any earlier date specified by VeriSign any and all property of VeriSign, including without limitation your computer, your ID badge and any other property or equipment issued to you by VeriSign, files, correspondences, notes, notebooks, reports, plans, business plans, financial documents and any other documents prepared for or by VeriSign concerning the Company or the Company’s customers, employees, products, services, technology, processes or strategies, including copies of all original documents.

6. Ongoing Confidentiality Obligations. You agree to keep confidential and not to use any trade secret, confidential business or proprietary information which you acquired during your employment with VeriSign, including, but not limited to, any marketing, finance, business, legal, technical, or sales information, plans, or strategies related to any VeriSign Company or any of their respective customers. This is intended to cover any information of a nature not normally disclosed by VeriSign to the general public. You agree that every term of this Agreement, including, but not limited to the amounts to be paid under this Agreement, shall be treated by you as strictly confidential, and expressly covenant not to display, publish, disseminate, or disclose the terms of this Agreement to any person or entity other than your immediate family members, your attorneys or your tax advisors (and you agree to instruct them to keep the terms of this Agreement confidential), or as necessary to enforce this Agreement, or as required by law or legal process. You agree that you will provide VeriSign with as much advance notice as practicable, and at least as much advance notice as is required by Section 3.1 above, if you are required by law or legal process to disclose any confidential, proprietary or trade secret information of VeriSign or any other VeriSign Company.

7. Nondisparagement / No Unauthorized Public Statements. You agree to refrain from making any derogatory, disparaging or defamatory remarks, statements or communications about

 

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any VeriSign Party or concerning any products or services being developed, marketed or sold by any VeriSign Company. You further agree that you will not make any public statement about VeriSign or any other VeriSign Party without the advance written approval of VeriSign’s Chief Executive Officer.

VeriSign agrees that no member of the Board of Directors and no Executive Vice President of the Company shall make any derogatory, disparaging or defamatory remarks, statements or communications about you.

You and VeriSign agree that you will mutually agree on the content of any message announcing your departure from VeriSign that will be contained in any press release.

Nothing in Sections 6 and 7 shall have application to any evidence or testimony requested by any court, arbitrator or government agency or any VeriSign Party’s compliance with any applicable disclosure requirements, except that you agree that you will provide VeriSign with as much advance notice as practicable, and at least as much advance notice as is required by Section 3.1 above, before disclosing any confidential, proprietary or trade secret information of VeriSign or any other VeriSign Company to any court, arbitrator or government agency.

8. Non-solicitation.

8.1 Nonsolicitation of Employees and Consultants. During the term of your employment with VeriSign and for twelve (12) months after the Termination Date, you agree that you will not directly or indirectly solicit, encourage or induce, or attempt to solicit, encourage or induce, any employee or consultant of a VeriSign Company to terminate his/her employment or consulting relationship with such VeriSign Company.

8.2 Nonsolicitation of Customers. For twelve (12) months after the Termination Date, you agree that you will not directly or indirectly:

(i) contact or solicit business from any customer (including any prospective customer) of any VeriSign Company for the purpose of attempting to sell, license or otherwise provide to such customer (or prospective customer) any Restricted Products or Services (defined below); or

(ii) interfere or attempt to interfere with the relationship or prospective relationship of any VeriSign Company with any person or entity that is or is expected to become a customer of a VeriSign Company.

For the purposes of this Agreement, “Restricted Products or Services” means any product or service that any VeriSign Company was developing, providing, selling, licensing, marketing or distributing to customers or potential customers as of the Termination Date.

9. Noncompete. In light of the consulting arrangement described above as well as your continued access to and knowledge of confidential and proprietary information and trade secrets of VeriSign, and acknowledging that it would be difficult for you to accept employment competitive with VeriSign without the risk of use or disclosure of confidential and proprietary information and trade secrets of the company, however inadvertent, you agree that, during the

 

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term of your employment with VeriSign and for twelve (12) months after the Termination Date, you will not, in any county, state, country or other jurisdiction in which any VeriSign Company does business or, as of the Termination Date, is planning to do business:

(i) directly or indirectly, alone or with others, engage in any Restricted Business (as defined below);

(ii) be or become a director, officer, stockholder, owner, co-owner, partner, member, trustee, promoter, founder, employee, agent, representative, distributor, reseller, sublicensor, investor, lender, consultant, contractor, advisor or manager of or to, or otherwise acquire or hold any interest in any person or entity that engages in a Restricted Business;

(iii) permit your name to be used in connection with a business that is a Restricted Business; or

(iv) directly or indirectly, alone or with others, interfere with any business of a VeriSign Company;

provided, however, that nothing in this Section 9 will prevent you from (A) owning a passive investment of less than one percent (1%) of the outstanding shares of the capital stock of a publicly-held corporation if you are not otherwise associated, directly or indirectly, with such corporation or any affiliate company of such corporation; (B) owning as a passive investment less than one percent (1%) of the equity interests in any venture capital fund in which you are solely a passive investor and are not a principal, partner, advisor or other service provider for such venture capital fund; (C) serving as an employee or consultant to any VeriSign Company; or (D) continuing as a Board member of Omniture, Inc. (OMTR).

For the purposes of this Agreement, “Restricted Business” means any company or entity which is engaged in the following lines of business: domain name services, SSL security services, managed security services, PKI services, network consumer authentication services, content delivery network services, messaging services, communications services similar to or competitive with the communications services offered by VeriSign and activities directly related to such lines of business.

10. Employee Acknowledgement. You acknowledge that VeriSign’s agreement to pay you the amounts stated in this Agreement is contingent upon your agreement to comply with your obligations under this Agreement. You further agree that if it is determined through binding arbitration pursuant to Section 12.2 below that you have breached any term of this Agreement in any significant respect, then the Company may: (i) require that you repay to VeriSign any payment made to you pursuant to this Agreement and that you pay to the Company all gains received by you from the exercise of stock options and restricted stock units the vesting of which was accelerated pursuant to Section 2.5 above; and (ii) may refuse to make any further payments to you that otherwise would be made to you under this Agreement or to permit you to exercise unexercised stock options and restricted stock units the vesting of which was accelerated pursuant to Section 2.5 above. You agree that the restrictions imposed upon you in this Agreement are as narrow in scope as is consistent with the protection of the Company’s legitimate interest in the protection of its confidential information and proprietary information and trade secrets.

 

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11. No Assignment. You represent that no portion of any claims or rights that you have released and no portion of any recovery or settlement to which you may be entitled has been assigned or transferred to any other person, firm, corporation or other entity not a party to this Agreement in any manner, including by way of subrogation or operation of law or otherwise. If any claim, action, demand or suit should be made or instituted against any VeriSign Party because of any such purported assignment, subrogation or transfer, you agree to indemnify and hold harmless the VeriSign Party against such claim, action, suit or demand, including necessary expenses of investigation, attorneys’ fees and costs.

12. General.

12.1 Governing Law. This Agreement shall be governed by the laws of California without regard to conflicts of law principles.

12.2 Arbitration. All controversies, claims and disputes arising out of or relating to this Agreement or your separation from the Company, including without limitation any alleged violation of the terms of this Agreement, shall be resolved by final and binding arbitration before a single neutral arbitrator in San Francisco, California, in accordance with the Employment Dispute Resolution Rules of the Judicial Arbitration and Mediation Services (“JAMS”). The arbitration shall be commenced by filing a demand for arbitration with JAMS within fourteen (14) days after the filing party has given written notice of such breach to the other party. Notwithstanding the foregoing, it is acknowledged that it will be impossible to measure in money the damages that would be suffered if the parties fail to comply with any of the obligations imposed on them under Sections 5, 6, 8, or 9, and that in the event of any such failure, an aggrieved person will be irreparably damaged and will not have adequate remedy at law. Any such person shall, therefore, be entitled to injunctive relief, including specific performance, to enforce such obligations, and if any action shall be brought in equity to enforce any of the provisions of Sections 5, 6, 8 or 9 of this Agreement, none of the parties hereto shall raise the defense that there is no adequate remedy at law.

12.3 Severability. Should any provision of this Agreement be declared or determined by an arbitrator or court of competent jurisdiction to be invalid or otherwise unenforceable, the remaining parts, terms and provisions shall continue to be valid, legal and enforceable, and will be performed and enforced to the fullest extent permitted by law.

12.4 Taxes. All payments stated in this Agreement will be subject to applicable tax withholdings and other deductions. To the extent any taxes may be payable by you for the payments and benefits provided to you by this Agreement beyond those withheld by the Company, you agree to pay them yourself and to indemnify and hold the Company and other persons and entities released by this Agreement harmless for any tax claims or penalties, and associated attorneys’ fees and costs, resulting from any failure by you to make required payments.

12.5 Construction. The subject headings in this Agreement are for convenience purposes only and do not affect the interpretation of this Agreement. It is agreed that any legal rule to the effect that ambiguities ought to be resolved against the drafting party shall not apply to any interpretation of this Agreement.

 

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12.6 Counterparts. This Agreement may be executed in counterparts, and each counterpart shall have the same force and effect as an original and shall constitute an effective, binding agreement on the part of each of the undersigned. This Agreement may be signed via facsimile.

12.7 Notices. All notices, demands or other communications regarding this Agreement shall be in writing and shall be sufficiently given if either personally delivered or sent by overnight courier, addressed as follows:

(a) If to the Company:

VeriSign, Inc.

Attention: General Counsel

21351 Ridgetop Circle

Dulles, Virginia 20166

(b) If to you to:

Attention: Dana Evan

[Address]

12.8 Entire Agreement. You agree that this Agreement contains the entire agreement between you and VeriSign and supersedes all prior or contemporaneous agreements or understandings between you and VeriSign, or any entity that has been acquired by VeriSign, on the subject matters of this Agreement, except this Agreement does not supersede: (i) the Indemnification Agreement entered into by you on November 13, 1996 (the “Indemnity Agreement”); (ii) the letter agreement dated November 3, 2006 and signed by you on November 10, 2006 (the “Indemnity Letter Agreement”), (iii) the VeriSign, Inc. Employee Agreement Confidential Information that you signed on June 1, 1996, (iv) the VeriSign, Inc. Employee Agreement Inventions and Patents that you signed on June 1, 1996; (v) any portion of any agreements you may have entered into that either provides greater protection to VeriSign’s confidential or proprietary information or assigns ownership to VeriSign or any of its subsidiaries of inventions, developments, patents, trademarks, copyrights, trade secrets or any other intellectual property; (vi) any stock option plans, stock options agreements, notices of grant and option election forms that relate to any grants of stock options or restricted stock units or restricted stock awards that were granted to you by the Company; or (vii) the Company’s 401(k) plan and any rights you may have thereunder ((i)-(vii) above collectively the “Surviving Agreements.” The Surviving Agreements will each remain in full force and effect in accordance with each of their respective specific terms and conditions.

12.9 Amendments. No changes to this Agreement will be valid unless the change is in writing, is signed by both you and VeriSign’s Chief Executive Officer and specifically states that it is amending this Agreement.

 

CONFIDENTIAL		12

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Please read this Agreement carefully. We will hold this offer open for twenty-one (21) days. VeriSign will have no obligations to you under this Agreement if you do not sign it and return it before the Acceptance Expiration Date or if you revoke your acceptance of this Agreement during the Revocation Period.

Your signature below will indicate that you are entering into this Agreement freely and with a full understanding of its terms and that you are committing to comply with all of the obligations imposed upon you by this Agreement. You may keep the enclosed duplicate copy of this Agreement for your files.

If you have any questions, please feel free to contact me.

 

cc: Linda McPharlin

I, DANA EVAN, HAVE READ AND UNDERSTAND THIS AGREEMENT, AND I ENTER INTO IT VOLUNTARILY, WITH FULL KNOWLEDGE OF ITS EFFECT. I UNDERSTAND THAT ALL REFERENCES IN THIS AGREEMENT TO “YOU” ARE REFERENCES TO ME, DANA EVAN. THE EXECUTION, DELIVERY AND PERFORMANCE OF THIS AGREEMENT BY ME WILL NOT CONFLICT WITH, BREACH, OR VIOLATE OR CAUSE A DEFAULT UNDER ANY AGREEMENT CONTRACT OR INSTRUMENT TO WHICH I AM SUBJECT.

 

/s/ DANA L. EVAN				8/15/2007
Signature				Date
/s/ CAROL MASON				8/15/2007
Witness				Date

CONFIDENTIAL		13

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EXHIBIT A

Outstanding Option Grants

 

Grant Date		Grant Number		Governing Plan		Exercise Price				Total Options Granted		Vested Options As Of Termination Date (not subject to “no sale” restriction)		Vested Options Subject To “No Sale” Restriction As Of Termination Date			Unvested Options As Of Termination Date
8/1/2000		20002204		1998 Plan		$	165.22	1		1,322		1,322		0			0
8/1/2000		20002205		1998 Plan		$	165.22	2		123,678		123,678		0			0
12/29/2000		20002904		1998 Plan		$	127.31	3		25,000		25,000		0			0
3/15/2001		20004272		1998 Plan		$	42.26	4		40,000		40,000		0			0
9/6/2001		20007488		1998 Plan		$	38.30	5		90,000		90,000		0			0
2/21/2002		20009538		1998 Plan		$	23.74	6		100,000		100,000		0			0
5/24/2002		20009712		1998 Plan		$	10.08			75,000		75,000		0			0
8/11/2003		21000631		1998 Plan		$	12.88			80,000		75,000		0			5,000
11/3/2004		21004442		1998 Plan		$	26.53			135,000		84,375		50,625	7		0
8/2/2005		21005409		1998 Plan		$	26.40			108,000		47,250		60,750	8		0
8/1/2006		21009180		2006 Plan		$	17.94			81,000		0		0			81,000
Total												661,625		111,375			86,000

Outstanding RSU And RSA Grants

 

Grant Date

Grant Number

Grant Type

Governing Plan

Total RSU’s or RSA’s Granted

Vested RSU’s or Vested RSA’s As Of Termination Date

Unvested RSU’s or Unvested RSA’s As Of Termination Date

8/11/2003

71000000

RSA

1998 Plan

30,000

30,000

0

8/2/2005

U1000012

RSU

1998 Plan

12,000

1,200

10,800

8/1/2006

U1000072

RSU

2006 Plan

9,000

0

9,000

Total

31,200

19,800

 

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1	The original exercise price was $151.25.

2	The original exercise price was $151.25.

3	The original exercise price was $74.188

4	The original exercise price was $34.4380

5	The original exercise price was $34.16.

6	The original exercise price was $22.71.

7

These options were vested as of the Termination Date but were subject to a no sale restriction imposed by the Board on December 29, 2005. However, as reflected in Exhibit B, these options have been taken into account when calculating the total number of unvested options to be subject to acceleration of vesting.

8

These options were vested as of the Termination Date but were subject to a no sale restriction imposed by the Board on December 29, 2005. However, as reflected in Exhibit B, these options have been taken into account when calculating the total number of unvested options to be subject to acceleration of vesting.

 

CONFIDENTIAL		14

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EXHIBIT B

Acceleration of Vesting of Stock Options And Restricted Stock Units

I. Acceleration of Vesting of Stock Options

The stock options that were vested but subject to a no-sale restriction will be taken into account when calculating the total number of unvested options to be subject to acceleration of vesting as follows:

111,375 stock options subject to “no sale” restriction + 86,000 unvested options as of Termination Date = a total of 197,375.

197,375 * 25% = 49,343 unvested options to be subject to acceleration of vesting.

Only the 49,343 unvested options with the lowest Exercise Price will be subject to acceleration of vesting as set forth in the table below.

 

Grant Date		Grant Number		Governing Plan		Exercise Price			Number Of Options Subject To Acceleration Of Vesting
8/11/2003		21000631		1998 Plan		$	12.88		5,000
8/1/2006		21009180		2006 Plan		$	17.94		44,343
Total									49,343

II. Acceleration of Vesting of RSU’s

Pursuant to the Agreement, only the following twenty-five percent (25%) of the total 19,800 unvested RSU’s will be subject to acceleration of vesting as set forth in the table below:

 

Grant Date		Grant Number		Governing Plan		Number Of RSU’s Subject To Acceleration Of Vesting
8/2/2005		U1000012		1998 Plan		2,700
8/1/2006		U1000072		2006 Plan		2,250
Total						4,950

 

CONFIDENTIAL		15

EXHIBIT 10.36

 

May 2, 2007

Anne Marie Law

[Address]

Dear Anne Marie:

On behalf of VeriSign, Inc. I am pleased to offer you a regular full-time position of Vice President Human Resources Business Partner, Product Management & Marketing (926.VICE PRESIDENT) reporting to Rod McCowan. The details of the offer are as follows:

Annual Salary: $230,000 (Paid Bi-Weekly)

Hiring Bonus: $30,000 (To be paid in two allotments. First payment of $15,000 payable six months after your start date, second payment of $15,000 payable one year after your start date). Should you voluntarily terminate from VeriSign for any reason within one year of your hire date, you will be required to repay VeriSign $30,000 on a pro-rated basis.

Stock Options and Restricted Stock Units: I will recommend to the Board of Directors that you be granted stock options to purchase 36,820 shares of Common Stock of VeriSign, Inc., such grant to be subject to terms and conditions of the VeriSign, Inc. 2007 Equity Incentive Plan. The exercise price of the options will be based on the fair market value on the date of grant. You will be eligible to exercise up to twenty-five percent (25%) of your total shares one year from the date of grant, provided that you are employed by VeriSign, Inc. or one of its direct or indirect subsidiaries at that time. Each subsequent quarter (3 months) an additional 6.25% of your total shares will become eligible to exercise provided that you are employed by VeriSign. Additionally, I will recommend to the Board of Directors that you be granted 5,140 restricted stock units of VeriSign, Inc., such grant to be subject to the terms and conditions of the VeriSign, Inc. 2007 Equity Incentive Plan. This award will fully vest over a period of four years from the date of the award with 25% vesting after on each annual anniversary of the grant date provided that you are employed by VeriSign, Inc. or one of its direct or indirect subsidiaries at that time. We recommend that you consult with your tax advisor regarding tax treatment of restricted stock units and stock options.

Annual Bonus: You are eligible to participate in the 2007 VeriSign Bonus Plan. Your targeted bonus percentage for the 2007 Bonus plan is 35% of your base salary. Eligibility for payment under this plan is governed by the terms and conditions of the VeriSign Bonus Plan Document.

Benefits: Your medical and insurance benefits will be commensurate with those of other employees. The full package of benefits is attached. New employees receive 18 days of paid time off per year. VeriSign also observes 11 paid holidays per year. Please Note: Your benefits information for 2007 will be mailed to your home shortly after your date of hire.

This offer is contingent upon your signing the Company’s Confidentiality Agreements included with this offer and upon successful clearance of your background check. To the extent permitted by applicable law, such background checks may include, among other things, an investigation of your educational background, previous employment, previous addresses, department of motor vehicle records, a criminal records check, a credit check, a social security check, drug testing, finger printing, and an investigation to determine whether you have been “statutorily disqualified”, as such term is defined in Section 3(a)(39) of the Securities Exchange Act of 1934 (as amended). It is also contingent upon providing evidence of your legal right to work in the United States as required by the Immigration and Naturalization Service. This offer is for employment on an at will basis, which means that this relationship can be terminated at any time by either party.

 

1

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To accept this offer, please sign below and return the original offer letter plus the additional enclosed documents in the return envelope and keep a copy of the offer letter for your records. This offer will expire on Monday, May 7, 2007. Please contact Laurie Miller at (650) 426-4663 if you have any questions.

Our New Hire Orientation Meetings are conducted every Monday at 675 East Middlefield Road in Mountain View. The meeting time is approximately two hours and begins at 8:30A.M. Please check with your recruiter to see when your New Hire Orientation will be conducted. When you arrive, please let the VeriSign receptionist know that you are there for orientation.

Our goal is to continue to transform communication and commerce by driving simplicity, innovation, and confidence into all electronic interactions worldwide. We are confident we will achieve this goal thanks to our committed group of industry partners throughout the world and most importantly to our employees - our most valued and respected asset. We hope you will join our team and help to contribute to our goal!

 

Sincerely,				Accepted:		/s/ ANNE-MARIE LAW		Date:		3 May 2007
						(Signature)
/s/ ROD MCCOWAN Rod McCowan
Senior Vice President, Human Resources				Start Date:		28 May 2007

 

2

EXHIBIT 10.37

September 20, 2007                

Kevin A. Werner

[Address]

Dear Kevin,

On behalf of VeriSign, Inc. (“VeriSign”) I am pleased to offer you a regular full-time position of Senior Vice President, Corporate Development and Strategy reporting to Bill Roper, President and CEO. The details of the offer are as follows:

1. Annual Salary: $ 350, 000 (paid in bi-weekly installments)

2. Stock Options and Restricted Stock Units:

(i) Stock Options: I will recommend to the VeriSign, Inc. Board of Directors (the “Board”) that you be granted nonqualified stock options to purchase 90,000 shares of Common Stock of VeriSign, Inc., such grant to be subject to the terms and conditions of the VeriSign, Inc. 2006 Equity Incentive Plan and the corresponding Stock Option Agreement. The exercise price of the options will be based on the fair market value on the date of grant. You will be eligible to exercise up to twenty-five percent (25%) of your total shares one year from the date of grant, provided that you are employed by VeriSign or one of its subsidiaries at that time. Each subsequent quarter (3 months) an additional 6.25% of your total shares will become eligible to exercise provided that you are employed by VeriSign or one of its subsidiaries.

(ii) Performance Vesting RSU’s: Additionally, I will recommend to the Board that you be granted 30,000 performance vesting restricted stock units of VeriSign, Inc., such grant to be subject to the terms and conditions of the VeriSign, Inc. 2006 Equity Incentive Plan and the corresponding Performance Based Restricted Stock Unit Agreement (the “Performance RSU Agreement”). If the performance criterion specified in the Performance RSU Agreement is achieved one hundred percent (100%) of this RSU award will vest on the third year anniversary of the date of grant, provided that you are employed by VeriSign or one of its subsidiaries at that time. If the performance criterion is not achieved then fifty percent (50%) of the RSU award vests on the fourth anniversary of the date of grant, provided that you are employed by VeriSign or one of its subsidiaries at that time, and the remaining fifty percent (50%) of the RSU award will be forfeited. We recommend that you consult with your tax advisor regarding tax treatment of restricted stock units and stock options.

(iii) Time Vesting RSU’s: Additionally, I will recommend to the Board that you be granted 10,000 time vesting restricted stock units of VeriSign, Inc., such grant to be subject to the terms and conditions of the VeriSign, Inc. 2006 Equity Incentive Plan and the corresponding Restricted Stock Unit Agreement. This award will fully vest over a period of four years from the date of the award with 25% vesting on each annual anniversary of the grant date provided that you are employed by VeriSign, Inc. or one of its direct or indirect subsidiaries at that time.

3. Annual Bonus: You are eligible to participate in the 2007 VeriSign Performance Plan bonus program (the “2007 Bonus Plan”). Your target bonus percentage for the 2007 Bonus Plan is 60% of your base salary. You will be eligible to receive up to your full target bonus (not a pro rated amount) for 2007, subject to your achievement of performance goals as outlined by VeriSign’s CEO and to the terms and conditions of the VeriSign Performance Plan policy which is accessible via the VeriSign intranet.

4. Benefits: Your medical and insurance benefits will be commensurate with those of other employees. New employees receive 18 days of paid time off per year. VeriSign also observes 11 paid holidays per year. Please Note: Your benefits information for 2007 will be mailed to your home shortly after your date of hire.

 

1

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5. Relocation: You and VeriSign agree that you will not be relocating from the San Diego area upon the commencement of your employment with VeriSign but rather you agree to travel as needed. If you agree to relocate at VeriSign’s request at a later date then you will be provided with the following Relocation Package in connection with your relocation from the San Diego area:

 

(i)

Reimbursement of all reasonable and customary costs that you incur in connection with selling your primary residence, including without limitation any real estate broker’s commission up to six percent (6%) of the selling price of the residence, any applicable transfer taxes, and inspections;

 

(ii)

Reimbursement of all reasonable and customary costs that you incur in connection with purchasing a new home, including without limitation title search costs, document preparation fees, escrow and closing fees, recording fees, loan origination fees, points (if any) and reasonable real estate attorney’s fees;

 

(iii)

Reimbursement of all reasonable and customary costs that you incur in connection with packing, moving and unpacking household goods and two automobiles;

 

(iv)

Two (2) round-trip economy class airfare tickets for your spouse to travel to the new location on house-hunting trips;

 

(v)

One way economy class airfare for you, your spouse, your children and your pets to relocate to the new location;

 

(vi)

a temporary residence (Oakwood type housing or equivalent) in the new location for up to twenty-four (24) months pending either the sale of your current home or your purchasing and moving into a new home;

 

(vii)

a $3,000 per month allowance if you purchase a home in the new location and move out of the temporary housing referenced above, such monthly allowance to be paid to you until the earlier of (a) the sale of your primary residence in the San Diego area or (b) the twenty-fourth (24th) month after the date that VeriSign’s Chief Executive Officer directs you to commence the relocation process (the “Relocation Commencement Date”); and

 

(viii)

Seventy-five percent (75%) of the “Home Sale Shortfall” (defined below), if any and if incurred within twenty-four (24) months of the Relocation Commencement Date.

If you agree to relocate and your primary residence is not sold within the first ninety (90) days of being on the market for sale (the “Initial Marketing Period”) then you agree to have two appraisals of the residence performed by independent and qualified appraisers based in the San Diego area. If the higher of those two appraisal values exceeds the lower appraisal value by five percent (5%) or less of the higher appraisal value then those two appraisal values will be averaged to determine the “Target Home Sale Price.” However, if the higher of those two appraisal values exceeds the lower appraisal value by more than five percent (5%) of the higher appraisal value then you will have a third appraisal conducted by a third independent and qualified appraiser based in the San Diego area and the two highest appraisal values of the three appraisals referenced above will be averaged to determine the “Target Home Sale Price.”

If your home is not sold during the Initial Marketing Period you will continue to market it for sale during a subsequent “Additional Marketing Period” which will extend until the second year anniversary of the Relocation Commencement Date. If your home is sold during the Additional Marketing Period for less than the Target Home Sale Price then the difference between the Target Home Sale Price and the actual sale price of the home will be deemed the “Home Sale Shortfall” and VeriSign will pay you a percentage of the Home Sale Shortfall as specified above at Section 5(viii) of this letter. For the purpose of clarification, if you sell your current home for less than the Target Home Sale Price after the second year anniversary of the Relocation Commencement Date, then VeriSign will have no obligation to pay you any portion of the Home Sale Shortfall.

All of the components of the Relocation Package described above in this Section 5 will be entitled to a tax “gross-up” for any imputed income required to be recognized with respect to such relocation package so that the economic effect to you is the same as if all components of the Relocation Package were provided to you on a non-taxable basis (the “Relocation Gross-Up”). The Relocation Gross-Up, or components thereof if reimbursed at

 

2

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different times, will be paid to you by not later than the end of your taxable year next following the taxable year in which such taxes relating to the Relocation Package (or components thereof) are remitted to the relevant taxing authority.

For the purpose of clarification, any business related expenses that you incur in connection with your employment with VeriSign, including travel to the new location before you relocate there if you agree to relocate, will be reimbursable subject to the terms and conditions of VeriSign’s travel and expense reimbursement policy in effect at the time the expense is incurred.

6. Change in Control: In the event of a “Termination Upon Change-in-Control” as defined in the form Change-In-Control And Retention Agreement approved by the Compensation Committee of the Board on August 24, 2007 (the “CIC Agreement”) you shall receive: (i) acceleration of vesting of all unvested and outstanding Equity Awards (defined in the CIC Agreement), subject to the terms and conditions of the CIC Agreement, and (ii) a cash severance comprised of a pro rata target bonus for the fiscal year in which the Termination Upon Change-in-Control occurs and a lump sum payment equal to twelve months of annual base salary plus a bonus, all as defined in and subject to the terms and conditions of the CIC agreement.

7. Taxes: All payments stated in this letter will be subject to applicable tax withholdings and other legally required deductions.

8. Contingencies: This offer is conditional upon your signing VeriSign’s Assignment of Invention, Nondisclosure And Nonsolicitation Agreement and upon successful clearance of your background check. It is also conditional upon your providing evidence of your legal right to work in the United States as required by the Immigration and Naturalization Service. You should not take any action in reliance on this conditional offer letter before VeriSign confirms for you in writing that all of the conditions set forth above have been satisfied.

9. At-Will Employment: This offer is for employment on an at will basis, which means that this relationship can be terminated at any time by either party either with or without cause.

To accept this offer, please sign below and return the original offer letter plus the additional enclosed documents in the return envelope and keep a copy of the offer letter for your records. This offer will expire on the 28 of September 2007. Please contact Anne-Marie Law at 650-996-6828, if you have any questions. We hope you will join our team and help to contribute to our goal!

Sincerely,

 

/s/ CHRIS BEDI

Chris Bedi

Vice President, Human Resources Operations

 

Accepted:		/s/ KEVIN A. WERNER
		(Signature)
Date: 21 SEPTEMBER 2007

Start Date: 24 SEPTEMBER 2007

 

3

EXHIBIT 10.38

September 20, 2007                    

Grant L Clark

[Address]

Dear Grant,

On behalf of VeriSign, Inc. (“VeriSign”) I am pleased to offer you a regular full-time position of Senior Vice President, Chief Administrative Officer reporting to Bill Roper, President and CEO. The details of the offer are as follows:

1. Annual Salary: $ 350, 000 (paid in bi-weekly installments)

2. Stock Options and Restricted Stock Units:

(i) Stock Options: I will recommend to the VeriSign, Inc. Board of Directors (the “Board”) that you be granted nonqualified stock options to purchase 90,000 shares of Common Stock of VeriSign, Inc., such grant to be subject to the terms and conditions of the VeriSign, Inc. 2006 Equity Incentive Plan and the corresponding Stock Option Agreement. The exercise price of the options will be based on the fair market value on the date of grant. You will be eligible to exercise up to twenty-five percent (25%) of your total shares one year from the date of grant, provided that you are employed by VeriSign or one of its subsidiaries at that time. Each subsequent quarter (3 months) an additional 6.25% of your total shares will become eligible to exercise provided that you are employed by VeriSign or one of its subsidiaries.

(ii) Performance Vesting RSU’s: Additionally, I will recommend to the Board that you be granted 30,000 performance vesting restricted stock units of VeriSign, Inc., such grant to be subject to the terms and conditions of the VeriSign, Inc. 2006 Equity Incentive Plan and the corresponding Performance Based Restricted Stock Unit Agreement (the “Performance RSU Agreement”). If the performance criterion specified in the Performance RSU Agreement is achieved one hundred percent (100%) of this RSU award will vest on the third year anniversary of the date of grant, provided that you are employed by VeriSign or one of its subsidiaries at that time. If the performance criterion is not achieved then fifty percent (50%) of the RSU award vests on the fourth anniversary of the date of grant, provided that you are employed by VeriSign or one of its subsidiaries at that time, and the remaining fifty percent (50%) of the RSU award will be forfeited. We recommend that you consult with your tax advisor regarding tax treatment of restricted stock units and stock options.

(iii) Time Vesting RSU’s: Additionally, I will recommend to the Board that you be granted 10,000 time vesting restricted stock units of VeriSign, Inc., such grant to be subject to the terms and conditions of the VeriSign, Inc. 2006 Equity Incentive Plan and the corresponding Restricted Stock Unit Agreement. This award will fully vest over a period of four years from the date of the award with 25% vesting on each annual anniversary of the grant date provided that you are employed by VeriSign, Inc. or one of its direct or indirect subsidiaries at that time.

3. Annual Bonus: You are eligible to participate in the 2007 VeriSign Performance Plan bonus program (the “2007 Bonus Plan”). Your target bonus percentage for the 2007 Bonus Plan is 60% of your base salary. You will be eligible to receive up to your full target bonus (not a pro rated amount) for 2007, subject to your achievement of performance goals as outlined by VeriSign’s CEO and to the terms and conditions of the VeriSign Performance Plan policy which is accessible via the VeriSign intranet.

4. Benefits: Your medical and insurance benefits will be commensurate with those of other employees. New employees receive 18 days of paid time off per year. VeriSign also observes 11 paid holidays per year. Please Note: Your benefits information for 2007 will be mailed to your home shortly after your date of hire.

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5. Relocation: You will be provided with the following Relocation Package in connection with your relocation from the San Diego area:

 

(i)

Reimbursement of all reasonable and customary costs that you incur in connection with selling your primary residence, including without limitation any real estate broker’s commission up to six percent (6%) of the selling price of the residence, any applicable transfer taxes, and inspections;

 

(ii)

Reimbursement of all reasonable and customary costs that you incur in connection with purchasing a new home, including without limitation title search costs, document preparation fees, escrow and closing fees, recording fees, loan origination fees, points (if any) and reasonable real estate attorney’s fees;

 

(iii)

Reimbursement of all reasonable and customary costs that you incur in connection with packing, moving and unpacking household goods and two automobiles;

 

(iv)

Two (2) round-trip economy class airfare tickets for your spouse to travel to the new location on house-hunting trips;

 

(v)

One way economy class airfare for you, your spouse and your pets to relocate to the new location;

 

(vi)

a two bedroom temporary residence (Oakwood type housing or equivalent) in the new location for up to twenty-four (24) months pending either the sale of your current home or your purchasing and moving into a new home;

 

(vii)

a $3,000 per month allowance if you purchase a home in the new location and move out of the temporary housing referenced above, such monthly allowance to be paid to you until the earlier of (a) the sale of your primary residence in the San Diego area or (b) the twenty-fourth (24th) month after the date that VeriSign’s Chief Executive Officer directs you to commence the relocation process (the “Relocation Commencement Date”); and

 

(viii)

Seventy-five percent (75%) of the “Home Sale Shortfall” (defined below), if any and if incurred within twenty-four (24) months of the Relocation Commencement Date.

In consideration for the Relocation Package described above, you agree to promptly put your primary residence on the market for sale. If your primary residence is not sold within the first ninety (90) days of being on the market for sale (the “Initial Marketing Period”) then you agree to have two appraisals of the residence performed by independent and qualified appraisers based in the San Diego area. If the higher of those two appraisal values exceeds the lower appraisal value by five percent (5%) or less of the higher appraisal value then those two appraisal values will be averaged to determine the “Target Home Sale Price.” However, if the higher of those two appraisal values exceeds the lower appraisal value by more than five percent (5%) of the higher appraisal value then you will have a third appraisal conducted by a third independent and qualified appraiser based in the San Diego area and the two highest appraisal values of the three appraisals referenced above will be averaged to determine the “Target Home Sale Price.”

If your home is not sold during the Initial Marketing Period you will continue to market it for sale during a subsequent “Additional Marketing Period” which will extend until the second year anniversary of the Relocation Commencement Date. If your home is sold during the Additional Marketing Period for less than the Target Home Sale Price then the difference between the Target Home Sale Price and the actual sale price of the home will be deemed the “Home Sale Shortfall” and VeriSign will pay you a percentage of the Home Sale Shortfall as specified above at Section 5(viii) of this letter. If you sell your current home for less than the Target Home Sale Price after the second year anniversary of the Relocation Commencement Date, then VeriSign will have no obligation to pay you any portion of the Home Sale Shortfall.

All of the components of the Relocation Package described above in this Section 5 will be entitled to a tax “gross-up” for any imputed income required to be recognized with respect to such relocation package so that the economic effect to you is the same as if all components of the Relocation Package were provided to you on a non-taxable basis (the “Relocation Gross-Up”). The Relocation Gross-Up, or components thereof if reimbursed at different times, will be paid to you by not later than the end of your taxable year next following the taxable year in which such taxes relating to the Relocation Package (or components thereof) are remitted to the relevant taxing authority.

 

2

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For the purpose of clarification, any business related expenses that you incur in connection with your employment with VeriSign, including travel to the new location before you relocate there, will be reimbursable subject to the terms and conditions of VeriSign’s travel and expense reimbursement policy in effect at the time the expense is incurred.

6. Change in Control: In the event of a “Termination Upon Change-in-Control” as defined in the form Change-In-Control And Retention Agreement approved by the Compensation Committee of the Board on August 24, 2007 (the “CIC Agreement”) you shall receive: (i) acceleration of vesting of all unvested and outstanding Equity Awards (defined in the CIC Agreement), subject to the terms and conditions of the CIC Agreement, and (ii) a cash severance comprised of a pro rata target bonus for the fiscal year in which the Termination Upon Change-in-Control occurs and a lump sum payment equal to twelve months of annual base salary plus a bonus, all as defined in and subject to the terms and conditions of the CIC agreement.

7. Taxes: All payments stated in this letter will be subject to applicable tax withholdings and other legally required deductions.

8. Contingencies: This offer is conditional upon your signing VeriSign’s Assignment of Invention, Nondisclosure And Nonsolicitation Agreement and upon successful clearance of your background check. It is also conditional upon your providing evidence of your legal right to work in the United States as required by the Immigration and Naturalization Service. You should not take any action in reliance on this conditional offer letter before VeriSign confirms for you in writing that all of the conditions set forth above have been satisfied.

9. At-Will Employment: This offer is for employment on an at will basis, which means that this relationship can be terminated at any time by either party either with or without cause.

To accept this offer, please sign below and return the original offer letter plus the additional enclosed documents in the return envelope and keep a copy of the offer letter for your records. This offer will expire on the 28 of September 2007. Please contact Anne-Marie Law at 650-996-6828, if you have any questions. We hope you will join our team and help to contribute to our goal!

Sincerely,

 

/s/ CHRIS BEDI

Chris Bedi

Vice President, Human Resources Operations

 

Accepted:		/s/ GRANT L. CLARK
		(Signature)
Date: 22 SEPTEMBER 2007

Start Date: 1 OCTOBER 2007

 

3

EXHIBIT 10.39

Summary of Compensation

for William A. Roper, Jr.

President and Chief Executive Officer

Effective May 27, 2007

Annual Base Salary: $750,000 (Paid Bi-Weekly)

Stock Options and Restricted Stock Units:

(i) Stock Options: Two non-qualified stock option to purchase and aggregate of 369,197 shares of VeriSign, Inc. (“VeriSign”) common stock, subject to the terms and conditions of the VeriSign 2006 Equity Incentive Plan and the corresponding Stock Option Agreement. The exercise price of the option is $29.63, the fair market value of VeriSign’s common stock on August 7, 2007, the date of grant. Both grants vest quarterly over a three-year period from the date of grant.

(ii) Time Vesting RSUs: Restricted stock units (RSUs) for 110,375 shares of VeriSign common stock granted on August 7, 2007, subject to the terms and conditions of the VeriSign 2006 Equity Incentive Plan and the corresponding Employee Restricted Stock Unit Agreement. Each RSU represents a contingent right to receive one share of VeriSign common stock once vested, and vests quarterly from the date of grant over three years.

(iii) Performance Vesting RSUs: Performance-based restricted stock units (performance-based RSUs) for 49,506 shares of VeriSign common stock granted on August 7, 2007, subject to the terms and conditions of the VeriSign 2006 Equity Incentive Plan and the corresponding Performance-Based Restricted Stock Unit Agreement. Each performance-based RSU represents a contingent right to receive one share of VeriSign common stock once vested, and vests as to 100% of the grant on the third anniversary of the date of grant if certain performance criterion is achieved, or as to 50% of the grant on the fourth anniversary of the date of grant if such performance criterion is not achieved, with the remaining 50% of the grant being forfeited.

Annual Bonus: Eligible to participate in the 2007 VeriSign Performance Plan. Targeted bonus percentage is 100% of the annual base salary that may be increased up to 200% of the annual base salary. Eligibility for payment under this plan is governed by the terms and conditions of the 2007 VeriSign Performance Plan.

Benefits: Medical and insurance benefits commensurate with those of other employees.

Change-in-Control: In the event of a “Termination Upon Change-in-Control” as defined in the form Change-In-Control and Retention Agreement (the “CIC Agreement”), Section 16 officers shall receive: (i) immediate vesting of all of the officer’s unvested stock options and RSUs if there is a termination of such officer’s employment within twenty-four months after a change-in-control by VeriSign without Cause (as defined in the CIC Agreement) or by the officer for Good Reason (as defined in the CIC Agreement) or up to six months before a change-in-control if the officer is terminated at the request of a third party in contemplation of a change-in-control and the change-in-control is effective within six months of the termination date; however, if the consideration to be received by stockholders of VeriSign in connection with the change-in-control consists of substantially all cash or if the stock options and RSUs held by the officer are not assumed in the change-in-control, then all of the officer’s then-unvested and outstanding stock options and RSUs shall vest immediately prior to the change-in-control regardless of whether or not there is a termination of employment in connection therewith, and (ii) a cash severance payment comprised of a pro rata target bonus for the fiscal year in which the Termination Upon Change-in-Control occurs, a lump sum payment equal to twelve months of annual base salary, and a bonus equal to the officer’s average target bonus for the three fiscal years preceding the year in which the Termination Upon Change-in-Control occurs (or if the officer was employed by VeriSign for fewer than three full fiscal years preceding the fiscal year in which the Termination Upon Change-in-Control occurs, the average target bonus for the number of full fiscal years the officer was employed by VeriSign prior to the change-in-control, or the target bonus for the fiscal year in which the Termination Upon Change-in-Control occurs if the officer was not eligible to receive a bonus from VeriSign during any of the prior three (3) fiscal years), all as further defined in and subject to the terms and conditions of the CIC Agreement.

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Summary of Compensation

for Albert E. Clement

Chief Financial Officer

Effective July 12, 2007

Annual Base Salary: $375,000 (Paid Bi-Weekly)

Stock Options and Restricted Stock Units:

(i) Stock Options: Non-qualified stock option to purchase 70,494 shares of VeriSign, Inc. (“VeriSign”) common stock, subject to the terms and conditions of the VeriSign 2006 Equity Incentive Plan and the corresponding Stock Option Agreement. The exercise price of the option is $29.63, the fair market value of VeriSign’s common stock on August 7, 2007, the date of grant. Twenty-five percent (25%) of the grant vests one year after the date of grant and thereafter as to six and one-quarter percent (6.25%) of the grant each quarter until fully vested.

(ii) Performance Vesting RSUs: Performance-based restricted stock units (performance-based RSUs) for 49,506 shares of VeriSign common stock granted on August 7, 2007, subject to the terms and conditions of the VeriSign 2006 Equity Incentive Plan and the corresponding Performance-Based Restricted Stock Unit Agreement. Each performance-based RSU represents a contingent right to receive one share of VeriSign common stock once vested, and vests as to 100% of the grant on the third anniversary of the date of grant if certain performance criterion is achieved, or as to 50% of the grant on the fourth anniversary of the date of grant if such performance criterion is not achieved, with the remaining 50% of the grant being forfeited.

Annual Bonus: Eligible to participate in the 2007 VeriSign Performance Plan. Targeted bonus percentage is 60% of the annual base salary. Eligibility for payment under this plan is governed by the terms and conditions of the 2007 VeriSign Performance Plan.

Benefits: Medical and insurance benefits commensurate with those of other employees.

Change-in-Control: In the event of a “Termination Upon Change-in-Control” as defined in the form Change-In-Control and Retention Agreement (the “CIC Agreement”), Section 16 officers shall receive: (i) immediate vesting of all of the officer’s unvested stock options and RSUs if there is a termination of such officer’s employment within twenty-four months after a change-in-control by VeriSign without Cause (as defined in the CIC Agreement) or by the officer for Good Reason (as defined in the CIC Agreement) or up to six months before a change-in-control if the officer is terminated at the request of a third party in contemplation of a change-in-control and the change-in-control is effective within six months of the termination date; however, if the consideration to be received by stockholders of VeriSign in connection with the change-in-control consists of substantially all cash or if the stock options and RSUs held by the officer are not assumed in the change-in-control, then all of the officer’s then-unvested and outstanding stock options and RSUs shall vest immediately prior to the change-in-control regardless of whether or not there is a termination of employment in connection therewith, and (ii) a cash severance payment comprised of a pro rata target bonus for the fiscal year in which the Termination Upon Change-in-Control occurs, a lump sum payment equal to twelve months of annual base salary, and a bonus equal to the officer’s average target bonus for the three fiscal years preceding the year in which the Termination Upon Change-in-Control occurs (or if the officer was employed by VeriSign for fewer than three full fiscal years preceding the fiscal year in which the Termination Upon Change-in-Control occurs, the average target bonus for the number of full fiscal years the officer was employed by VeriSign prior to the change-in-control, or the target bonus for the fiscal year in which the Termination Upon Change-in-Control occurs if the officer was not eligible to receive a bonus from VeriSign during any of the prior three (3) fiscal years), all as further defined in and subject to the terms and conditions of the CIC Agreement.

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Summary of Compensation

for Anne-Marie Law

Senior Vice President, Global Human Resources

Effective August 11, 2007

Annual Base Salary: $300,000 (Paid Bi-Weekly)

Stock Options and Restricted Stock Units:

(i) Stock Options: Non-qualified stock option to purchase 21,149 shares of VeriSign, Inc. (“VeriSign”) common stock, subject to the terms and conditions of the VeriSign 2006 Equity Incentive Plan and the corresponding Stock Option Agreement. The exercise price of the option is $29.63, the fair market value of VeriSign’s common stock on August 7, 2007, the date of grant. Twenty-five percent (25%) of the grant vests one year after the date of grant and thereafter as to six and one-quarter percent (6.25%) of the grant each quarter until fully vested.

(ii) Performance Vesting RSUs: Performance-based restricted stock units (performance-based RSUs) for 23,151 shares of VeriSign common stock granted on August 7, 2007, subject to the terms and conditions of the VeriSign 2006 Equity Incentive Plan and the corresponding Performance-Based Restricted Stock Unit Agreement. Each performance-based RSU represents a contingent right to receive one share of VeriSign common stock once vested, and vests as to 100% of the grant on the third anniversary of the date of grant if certain performance criterion is achieved, or as to 50% of the grant on the fourth anniversary of the date of grant if such performance criterion is not achieved, with the remaining 50% of the grant being forfeited.

Annual Bonus: Eligible to participate in the 2007 VeriSign Performance Plan. Targeted bonus percentage is 60% of the annual base salary. Eligibility for payment under this plan is governed by the terms and conditions of the 2007 VeriSign Performance Plan.

Benefits: Medical and insurance benefits commensurate with those of other employees.

Change-in-Control: In the event of a “Termination Upon Change-in-Control” as defined in the form Change-In-Control and Retention Agreement (the “CIC Agreement”), Section 16 officers shall receive: (i) immediate vesting of all of the officer’s unvested stock options and RSUs if there is a termination of such officer’s employment within twenty-four months after a change-in-control by VeriSign without Cause (as defined in the CIC Agreement) or by the officer for Good Reason (as defined in the CIC Agreement) or up to six months before a change-in-control if the officer is terminated at the request of a third party in contemplation of a change-in-control and the change-in-control is effective within six months of the termination date; however, if the consideration to be received by stockholders of VeriSign in connection with the change-in-control consists of substantially all cash or if the stock options and RSUs held by the officer are not assumed in the change-in-control, then all of the officer’s then-unvested and outstanding stock options and RSUs shall vest immediately prior to the change-in-control regardless of whether or not there is a termination of employment in connection therewith, and (ii) a cash severance payment comprised of a pro rata target bonus for the fiscal year in which the Termination Upon Change-in-Control occurs, a lump sum payment equal to twelve months of annual base salary, and a bonus equal to the officer’s average target bonus for the three fiscal years preceding the year in which the Termination Upon Change-in-Control occurs (or if the officer was employed by VeriSign for fewer than three full fiscal years preceding the fiscal year in which the Termination Upon Change-in-Control occurs, the average target bonus for the number of full fiscal years the officer was employed by VeriSign prior to the change-in-control, or the target bonus for the fiscal year in which the Termination Upon Change-in-Control occurs if the officer was not eligible to receive a bonus from VeriSign during any of the prior three (3) fiscal years), all as further defined in and subject to the terms and conditions of the CIC Agreement.

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Summary of Compensation

for Russell S. Lewis

Senior Vice President, Strategic Development

Effective August 7, 2007

Annual Base Salary: $350,000 (Paid Bi-Weekly)

Stock Options and Restricted Stock Units:

(i) Stock Options: Non-qualified stock option to purchase 70,494 shares of VeriSign, Inc. (“VeriSign”) common stock of VeriSign, subject to the terms and conditions of the VeriSign 2006 Equity Incentive Plan and the corresponding Stock Option Agreement. The exercise price of the options will be the fair market value on the date of grant of August 7, 2007. Twenty-five percent (25%) of the grant vests one year after the date of grant and thereafter as to six and one-quarter percent (6.25%) of the grant each quarter until fully vested.

(ii) Performance Vesting RSUs: Performance-based restricted stock units (performance-based RSUs) for 49,506 shares of VeriSign common stock granted on August 7, 2007, subject to the terms and conditions of the VeriSign 2006 Equity Incentive Plan and the corresponding Performance-Based Restricted Stock Unit Agreement. Each performance-based RSU represents a contingent right to receive one share of VeriSign common stock once vested, and vests as to 100% of the grant on the third anniversary of the date of grant if certain performance criterion is achieved, or as to 50% of the grant on the fourth anniversary of the date of grant if such performance criterion is not achieved, with the remaining 50% of the grant being forfeited.

Annual Bonus: Eligible to participate in the 2007 VeriSign Performance Plan. Targeted bonus percentage is 60% of the annual base salary. Eligibility for payment under this plan is governed by the terms and conditions of the 2007 VeriSign Performance Plan.

Benefits: Medical and insurance benefits commensurate with those of other employees.

Change-in-Control: In the event of a “Termination Upon Change-in-Control” as defined in the form Change-In-Control and Retention Agreement (the “CIC Agreement”), Section 16 officers shall receive: (i) immediate vesting of all of the officer’s unvested stock options and RSUs if there is a termination of such officer’s employment within twenty-four months after a change-in-control by VeriSign without Cause (as defined in the CIC Agreement) or by the officer for Good Reason (as defined in the CIC Agreement) or up to six months before a change-in-control if the officer is terminated at the request of a third party in contemplation of a change-in-control and the change-in-control is effective within six months of the termination date; however, if the consideration to be received by stockholders of VeriSign in connection with the change-in-control consists of substantially all cash or if the stock options and RSUs held by the officer are not assumed in the change-in-control, then all of the officer’s then-unvested and outstanding stock options and RSUs shall vest immediately prior to the change-in-control regardless of whether or not there is a termination of employment in connection therewith, and (ii) a cash severance payment comprised of a pro rata target bonus for the fiscal year in which the Termination Upon Change-in-Control occurs, a lump sum payment equal to twelve months of annual base salary, and a bonus equal to the officer’s average target bonus for the three fiscal years preceding the year in which the Termination Upon Change-in-Control occurs (or if the officer was employed by VeriSign for fewer than three full fiscal years preceding the fiscal year in which the Termination Upon Change-in-Control occurs, the average target bonus for the number of full fiscal years the officer was employed by VeriSign prior to the change-in-control, or the target bonus for the fiscal year in which the Termination Upon Change-in-Control occurs if the officer was not eligible to receive a bonus from VeriSign during any of the prior three (3) fiscal years), all as further defined in and subject to the terms and conditions of the CIC Agreement.

EXHIBIT 10.44

CONFIDENTIAL TREATMENT REQUESTED

[J.P.Morgan logo]

August 14, 2007    

VeriSign, Inc.

487 East Middlefield Road

Mountain View, CA 94043

Ladies and Gentlemen:

The purpose of this letter agreement (this “Confirmation”) is to confirm the terms and conditions of the Transaction entered into between J.P. Morgan Securities Inc., as agent for JPMorgan Chase Bank, National Association, London Branch (the “Seller”), and VeriSign, Inc., a Delaware corporation (the “Purchaser”), on the Trade Date specified below (the “Transaction”). This Confirmation constitutes a “Confirmation” as referred to in the Agreement specified below. In the event of a conflict between the Agreement (as defined below) and this Confirmation, the terms of this Confirmation shall govern.

This Confirmation evidences a complete and binding agreement between the Seller and the Purchaser as to the terms of the Transaction to which this Confirmation relates. This Confirmation shall supplement, form a part of, and be subject to an agreement in the form of the 2002 ISDA Master Agreement (the “Agreement”) as if the Seller and the Purchaser had executed an agreement in such form (but without any Schedule except for the election of the laws of the State of New York as the governing law) on the Trade Date. In the event of any inconsistency between provisions of the Agreement and this Confirmation, this Confirmation will prevail for the purpose of the Transaction to which this Confirmation relates. The parties hereby agree that no Transaction other than the Transaction to which this Confirmation relates shall be governed by the Agreement.

ARTICLE 1

DEFINITIONS

Section 1.01. Definitions. (a) As used in this Confirmation, the following terms shall have the following meanings:

“10b-18 VWAP” means, (A) for any Trading Day described in clause (x) of the definition of Trading Day hereunder, the volume-weighted average price at which the Common Stock trades as reported in the composite transactions for the principal United States securities exchange on which such Common Stock is then listed (or, if applicable, the Successor Exchange on which the Common Stock has been listed in accordance with Section 7.01(c)), on such Trading Day, excluding (i) trades that do not settle regular way, (ii) opening (regular way) reported trades in the consolidated system on such Trading Day, (iii) trades that occur in the last ten minutes before the scheduled close of trading on the Exchange on such Trading Day and ten minutes before the scheduled close of the primary trading in the market where the trade is effected, and (iv) trades on such Trading Day that do not satisfy the requirements of Rule 10b-18(b)(3), as determined in good faith by the Calculation Agent, or (B) for any Trading Day that is described in clause (y) of the definition of Trading Day hereunder, an amount determined in good faith by the Calculation Agent as 10b-18 VWAP. The Purchaser acknowledges that the Seller may refer to the Bloomberg Page “VRSN.UQ <Equity> AQR SEC” (or any successor thereto), in its judgment, for such Trading Day to determine the 10b-18 VWAP.

JPMorgan Chase Bank, National Association

Organised under the laws of the United States as a National Banking Association.

Main Office 1111 Polaris Parkway, Columbus, Ohio 43271

Registered as a branch in England & Wales branch No. BR000746.

Registered Branch Office 125 London Wall, London EC2Y 5AJ

Authorised and regulated by the Financial Services Authority

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“Additional Termination Event” has the meaning set forth in Section 7.01.

“Agreement” has the meaning set forth in the second paragraph of this Confirmation.

“Affected Party” has the meaning set forth in Section 14 of the Agreement.

“Affected Transaction” has the meaning set forth in Section 14 of the Agreement.

“Affiliated Purchaser” means any “affiliated purchaser” (as such term is defined in Rule 10b-18) of the Purchaser.

“Alternative Termination Delivery Unit” means (i) in the case of a Termination Event (other than a Merger Event or Nationalization) or Event of Default (as defined in the Agreement), one share of Common Stock and (ii) in the case of a Merger Event or Nationalization, a unit consisting of the number or amount of each type of property received by a holder of one share of Common Stock in such Merger Event or Nationalization; provided that if such Merger Event involves a choice of consideration to be received by holders of the Common Stock, an Alternative Termination Delivery Unit shall be deemed to include the amount of cash received by a holder who had elected to receive the maximum possible amount of cash as consideration for his shares.

“Amendment Date” means the Amendment Date as defined in the Schedule TO.

“Averaging Period” means the period of consecutive Trading Days from and including the first Trading Day following September 28, 2007 to and including the Valuation Completion Date.

“Bankruptcy Code” has the meaning set forth in Section 9.07.

“Business Day” means any day on which the Exchange is open for trading.

“Calculation Agent” means JPMorgan Chase Bank, National Association.

“Closing Date” means the date on which the issuance of Convertible Debentures is consummated and determined in accordance with the Purchase Agreement.

“Common Stock” has the meaning set forth in Section 2.01.

“Communications Procedures” has the meaning set forth in Annex A hereto.

“Confirmation” has the meaning set forth in the first paragraph of this letter agreement.

“Contract Period” means the period commencing on and including the Trade Date and ending on and including the date all payments or deliveries of shares of Common Stock pursuant to Article 3 or Section 7.03 have been made.

“Convertible Debentures” means the $1,100,000,000 aggregate principal amount (or up to $1,300,000,000 aggregate principal amount if the initial purchaser of the initial offering of Convertible Debentures exercises its over-allotment option) of Junior Subordinated Convertible Debentures due August 15, 2037 issued by the Purchaser pursuant to an indenture to be dated August 20, 2007 between the Purchaser and U.S. Bank National Association, as trustee.

“Default Notice Day” has the meaning set forth in Section 7.02(a).

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***	Note: Confidential treatment has been requested with respect to the information contained within the [***] marking. Such portions have been omitted from this filing and have been filed separately with the Securities and Exchange Commission.

 

2

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“De-Listing” has the meaning set forth in Section 7.01(c).

“Discount” means the amount specified as such in the Pricing Supplement.

“Downside Threshold” has the meaning specified as such in the Pricing Supplement.

“Early Termination Date” has the meaning set forth in Section 14 of the Agreement.

“Early Unwind” has the meaning set forth in Section 2.04.

“Early Unwind Date” has the meaning set forth in Section 2.04.

“Employee Stock Option Tender Offer” means the issuer tender offer proposed to be conducted by the Purchaser for certain of its employee stock options, as described in the Schedule TO.

“Event of Default” has the meaning set forth in Section 14 of the Agreement.

“Exchange” means The NASDAQ Global Select Market (or, if applicable, the Successor Exchange on which the Common Stock has been listed in accordance with Section 7.01(c)).

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Expiration Date” means the [***]^nd Trading Day following September 28, 2007.

“Extraordinary Cash Dividend” means the per share cash dividend or distribution, or a portion thereof, declared by the Purchaser on shares of Common Stock that is classified by the board of directors of the Purchaser as an “extraordinary” dividend.

“Fair Value Variables” mean, with respect to any calculation or determination of the fair value of this Transaction to Seller or an amount payable by or to Seller hereunder, any combination of one or more of the following variables: (i) stock borrow cost of [***] bps, (ii) interest rates of [***]% per annum, (iii) no changes in expected dividends since the Trade Date, (iv) volatility or volatilities (which, for the avoidance of doubt, shall include the entire volatility surface) at the time of such calculation or determination, (v) stock price experience prior to, and at the time of, such calculation or determination and (vi) any and all variables related to time; provided that, under no circumstances, will such a calculation or determination be based on or otherwise take into account actual or expected losses or costs incurred by Seller in connection with terminating, liquidating or re-establishing any hedge related to the Transaction (or any gain resulting from any of them).

“Indemnified Person” has the meaning set forth in Section 9.02.

“Indemnifying Party” has the meaning set forth in Section 9.02.

“Initial Number of Shares” means the number of shares of Common Stock specified as such in the Pricing Supplement.

“Interim Number of Shares”, for any Interim Share Delivery Date, means a number of shares of Common Stock as determined by Seller in its sole discretion which Seller shall deliver to Purchaser on such applicable Interim Share Delivery Date; provided that if the sum of the Initial Number of Shares and the aggregate of all Interim Number of Shares delivered prior to the Valuation Completion Date is less than the Minimum Delivery Number, Seller shall deliver a number of shares of Common Stock equal to such difference on the third Business Day following the Valuation Completion Date.

“Interim Share Delivery Date” means any Business Day designated by Seller in its sole discretion; provided that no such “Interim Share Delivery Date” shall occur later than the Valuation Completion Date.

 

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***	Note: Confidential treatment has been requested with respect to the information contained within the [***] marking. Such portions have been omitted from this filing and have been filed separately with the Securities and Exchange Commission.

 

3

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“Maximum Delivery Number” means, the number of shares of Common Stock, rounded down to the nearest integer, equal to (A) the Purchase Price divided by (B) the Downside Threshold.

“Merger Event” has the meaning set forth in Section 7.01(d).

“Minimum Delivery Number” means the number of shares of Common Stock, rounded down to the nearest integer, equal to (A) the Purchase Price divided by (B) the Upside Threshold.

“Nationalization” has the meaning set forth in Section 7.01(e).

“Obligations” has the meaning set forth in Section 9.02.

“Ordinary Cash Dividend” has the meaning set forth in Section 8.01(b).

“Pricing Supplement” means the Pricing Supplement attached hereto as Annex B.

“Purchase Agreement” means the Purchase Agreement relating to the sale of the Convertible Debentures between the Purchaser and J.P. Morgan Securities Inc. dated as of the date hereof.

“Purchase Price” has the meaning set forth in Section 2.01.

“Purchaser” has the meaning set forth in the first paragraph of this Confirmation.

“Regulation M” means Regulation M under the Exchange Act.

“Rule 10b-18” means Rule 10b-18 promulgated under the Exchange Act (or any successor rule thereto).

“Rule 10b5-1 Repurchase Plan” means the plan entered into between the Purchaser and a broker-dealer on or prior to the Closing Date for the Purchaser to repurchase shares of its Common Stock under Rule 10b5-1 of the Exchange Act during a period that ends on a date no later than September 28, 2007.

“Schedule TO” means the Schedule TO filed by the Purchaser with the SEC on July 27, 2007.

“SEC” means the Securities and Exchange Commission.

“Securities Act” means the Securities Act of 1933, as amended.

“Seller” has the meaning set forth in the first paragraph hereto.

“Seller Termination Share Purchase Period” has the meaning set forth in Section 7.03.

“Settlement Number” means the number of shares of Common Stock equal to (i) the Valuation Number minus (ii) the Minimum Delivery Number.

“Share Cap” means, for any date, (i) [***] shares of Common Stock, minus (ii) the net number of shares of Common Stock delivered by the Purchaser to the Seller in respect of this Transaction on or prior to such date, plus (iii) the net number of shares of Common Stock delivered by the Seller to the Purchaser in respect of this Transaction on or prior to such date, subject to appropriate adjustments pursuant to Section 8.02.

“Share De-listing Event” has the meaning set forth in Section 7.01(c).

“Successor Exchange” has the meaning set forth in Section 7.01(c).

“Termination Amount” has the meaning set forth in Section 7.02(a).

 

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***	Note: Confidential treatment has been requested with respect to the information contained within the [***] marking. Such portions have been omitted from this filing and have been filed separately with the Securities and Exchange Commission.

 

4

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“Termination Event” has the meaning set forth in Section 14 of the Agreement.

“Termination Price” means the value of an Alternative Termination Delivery Unit to the Seller, as determined by the Calculation Agent.

“Trade Date” has the meaning set forth in Section 2.01.

“Trading Day” means (x) any day (i) other than a Saturday, a Sunday, a day on which the Exchange is not open for business or the Amendment Date, (ii) during which trading of any securities of the Purchaser on any national securities exchange has not been suspended, (iii) during which there has not been, in the Seller’s judgment, (A) a suspension of, or limitation imposed on, trading by the Exchange or the applicable national securities exchange or otherwise, and whether by reason of movements in price exceeding limits permitted by the Exchange or the applicable national securities exchange or otherwise, relating to the shares of Common Stock on the Exchange or any options contract or futures contract related to the Common Stock on any national securities exchange or (B) an event that materially disrupts or impairs (as determined by the Calculation Agent) the ability of market participants in general to effect transactions in, or obtain market values for, the shares of Common Stock on the Exchange or any options contract or futures contract related to the Common Stock on any national securities exchange, and (iv) during which there has been no suspension pursuant to Section 4.02 of this Confirmation, or (y) any day that, notwithstanding the occurrence of events contemplated in clauses (ii), (iii) and (iv) of this definition, the Calculation Agent determines to be a Trading Day.

“Transaction” has the meaning set forth in the first paragraph of this Confirmation.

“Upside Threshold” has the meaning specified as such in the Pricing Supplement.

“Valuation Completion Date” has the meaning specified as such in the Pricing Supplement.

“Valuation Number” means the number of shares of Common Stock, rounded down to the nearest integer, equal to the Purchase Price divided by the Valuation Price; provided, however, that (i) if such number of shares of Common Stock is greater than the Maximum Delivery Number, the Valuation Number shall be equal to the Maximum Delivery Number and (ii) if such number of shares of Common Stock is less than the Minimum Delivery Number, the Valuation Number shall be equal to the Minimum Delivery Number.

“Valuation Price” means the average of the 10b-18 VWAPs for all Trading Days in the Averaging Period minus the Discount.

ARTICLE 2

PURCHASE OF THE STOCK

Section 2.01. Purchase of the Stock. Subject to the terms and conditions of this Confirmation, the Purchaser agrees to purchase from the Seller, and the Seller agrees, effective on the date hereof (the “Trade Date”), to sell to the Purchaser a number of shares of the Purchaser’s common stock, par value $0.001 per share (“Common Stock”), for a purchase price equal to $600,000,000 (the “Purchase Price”). The number of shares of Common Stock purchased by the Purchaser hereunder shall be determined in accordance with the terms of this Confirmation.

Section 2.02. Initial Delivery and Payments. On the Closing Date, the Seller shall deliver a number of shares of Common Stock equal to the Initial Number of Shares to the Purchaser, upon payment by the Purchaser of the Purchase Price to the Seller. Delivery and payment pursuant to this Section 2.02 shall be effected in accordance with the Seller’s customary procedures.

Section 2.03. Conditions to Seller’s Obligations. The Seller’s obligations under this Agreement are subject to the condition that the representations and warranties made by the Purchaser in the Agreement shall be true and correct as of the date hereof and the Closing Date.

 

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Section 2.04. Early Unwind. In the event the offering of Convertible Debentures is not consummated for any reason by the close of business in New York on August 20, 2007 (or such later date as agreed upon by the parties) (August 20, 2007 or such later date as agreed upon being the “Early Unwind Date”) or any other condition contained in Section 2.03 is not satisfied on such date, this Transaction shall automatically terminate (the “Early Unwind”) on the Early Unwind Date and (i) this Transaction and all of the respective rights and obligations of the Seller and the Purchaser under this Transaction, including, for the avoidance of doubt, any obligation of the Seller to deliver any shares of Common Stock pursuant to Sections 2.02 and 3.01 and the Purchaser’s obligation to make any payment with respect thereto pursuant to Sections 2.01 and 2.02, shall be cancelled and terminated and (ii) each party shall be released and discharged by the other party from and agrees not to make any claim against the other party with respect to any obligations or liabilities of the other party arising out of and to be performed in connection with this Transaction either prior to or after the Early Unwind Date; provided that if such offering of the Convertible Debentures is not consummated as a result of a failure by the Purchaser to satisfy any condition specified in Sections 6(a), (d), (e), (f), (j) and (m) of the Purchase Agreement, the Purchaser shall reimburse the Seller for any costs or expenses (including market losses) relating to the unwinding of its hedging activities in connection with this Transaction (including any loss or cost incurred as a result of its terminating, liquidating, obtaining, reestablishing or adjusting any hedge or related trading position but excluding any lost profits or similar opportunity costs) and purchase from the Seller any shares of Common Stock acquired by the Seller or one of more of its affiliates in connection with the establishment of the Seller’s initial hedge position with respect to this Transaction at the price equal to the Seller’s or such affiliate’s cost of acquiring such shares of Common Stock (as determined by the Seller in its sole judgment). The amount of any such reimbursement shall be determined by the Calculation Agent in good faith. The Calculation Agent shall notify the Purchaser of such amount and the Purchaser shall pay such amount in immediately available funds on, or as promptly as reasonably practicable after, the Early Unwind Date. The Seller and the Purchaser represent and acknowledge to the other that, subject to the proviso included in this Section 2.04, upon an Early Unwind, all obligations with respect to this Transaction shall be deemed fully and finally discharged

ARTICLE 3

SUBSEQUENT SHARE DELIVERIES

Section 3.01. Interim Delivery of Shares. On each Interim Share Delivery Date, the Seller may elect to deliver to Purchaser the applicable Interim Number of Shares.

Section 3.02. Final Delivery of Shares. On the third Business Day immediately following the Valuation Completion Date, the Seller shall deliver to the Purchaser a number of shares of Common Stock equal to the Settlement Number, if any.

Section 3.03. Deliveries pursuant to this Article 3 shall be effected in accordance with the Seller’s customary procedures.

ARTICLE 4

MARKET TRANSACTIONS

Section 4.01. Transactions by the Seller. (a) The parties agree and acknowledge that:

(i) During any Seller Termination Share Purchase Period, the Seller (or its agent or affiliate) may effect transactions in shares of Common Stock in connection with this Confirmation. The timing of such transactions by the Seller, the price paid or received per share of Common Stock pursuant to such transactions and the manner in which such transactions are made, including without limitation whether such transactions are made on any securities exchange or privately, shall be within the sole judgment of the Seller; provided that the Seller shall use good faith efforts to make all purchases of Common Stock in a manner that would comply with the limitations set forth in clauses (b)(2), (b)(3), (b)(4) and (c) of Rule 10b-18 as if such rule were applicable to such purchases.

 

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(ii) Beginning on the Trade Date and ending on the last day of the Averaging Period, the Seller (or its agent or affiliate) may effect transactions in shares of Common Stock in connection with this Confirmation. The timing of such transactions by the Seller, the price paid or received per share of Common Stock pursuant to such transactions and the manner in which such transactions are made, including without limitation whether such transactions are made on any securities exchange or privately, shall be within the sole judgment of the Seller.

(iii) The Purchaser shall, at least one day prior to the first day of any Seller Termination Share Purchase Period, notify the Seller of the total number of shares of Common Stock purchased in Rule 10b-18 purchases of blocks pursuant to the once-a-week block exception set forth in Rule 10b-18(b)(4) by or for the Purchaser or any of its Affiliated Purchasers during each of the four calendar weeks preceding such day and during the calendar week in which such day occurs (“Rule 10b-18 purchase” and “blocks” each being used as defined in Rule 10b-18), which notice shall be substantially in the form set forth as Exhibit A hereto.

(b) The Purchaser acknowledges and agrees that (i) all transactions effected pursuant to Section 4.01 hereunder shall be made in the Seller’s sole judgment and for the Seller’s own account and (ii) the Purchaser does not have, and shall not attempt to exercise, any influence over how, when or whether to effect such transactions, including, without limitation, the price paid or received per share of Common Stock pursuant to such transactions whether such transactions are made on any securities exchange or privately. It is the intent of the Seller and the Purchaser that this Transaction comply with the requirements of Rule 10b5-1(c) of the Exchange Act and that this Confirmation shall be interpreted to comply with the requirements of Rule 10b5-1(c)(1)(i)(B) and the Seller shall take no action that results in the Transaction not so complying with such requirements.

(c) Notwithstanding anything to the contrary in this Confirmation, the Purchaser acknowledges and agrees that, on any day, the Seller shall not be obligated to deliver or receive any shares of Common Stock to or from the Purchaser and the Purchaser shall not be entitled to receive any shares of Common Stock from the Seller on such day, to the extent (but only to the extent) that after such transactions the Seller’s ultimate parent entity would directly or indirectly beneficially own (as such term is defined for purposes of Section 13(d) of the Exchange Act) at any time on such day in excess of 8.0% of the outstanding shares of Common Stock. Any purported receipt or delivery of shares of Common Stock shall be void and have no effect to the extent (but only to the extent) that after any receipt or delivery of such shares of Common Stock the Seller’s ultimate parent entity would directly or indirectly so beneficially own in excess of 8.0% of the outstanding shares of Common Stock. If, on any day, any delivery or receipt of shares of Common Stock by the Seller is not effected, in whole or in part, as a result of this provision, the Seller’s and Purchaser’s respective obligations to make or accept such receipt or delivery shall not be extinguished and such receipt or delivery shall be effected over time as promptly as the Seller determines, in the reasonable determination of the Seller, that after such receipt or delivery its ultimate parent entity would not directly or indirectly beneficially own in excess of 8.0% of the outstanding shares of Common Stock.

Section 4.02. Adjustment of Transaction for Securities Laws. (A) If, based on the advice of counsel, Seller reasonably determines that, on any Trading Day, Seller’s trading activity in order to manage its economic hedge in respect of the Transaction would not be advisable in respect of applicable securities laws, then Seller may extend the Expiration Date, modify the Averaging Period, or otherwise adjust the terms of the Transaction in its good faith reasonable discretion to ensure Seller’s compliance with such laws and to preserve the fair value of the Transaction to the Seller. For purposes of this Section 4.02, the fair value of the Transaction to the Seller shall be determined solely on the basis of the Fair Value Variables. The Seller shall notify the Purchaser of the exercise of the Seller’s rights pursuant to this Section 4.02(a) upon such exercise.

(b) The Purchaser agrees that, during the Contract Period, neither the Purchaser nor any of its affiliates or agents shall make any distribution (as defined in Regulation M) of Common Stock, or any security for which the Common Stock is a reference security (as defined in Regulation M) or take any other action that would, in the view of the Seller, preclude purchases by the Seller of the Common Stock or cause the Seller to violate any law, rule or regulation with respect to such purchases; provided, however, that notwithstanding the foregoing, nothing in this Confirmation shall prohibit the Purchaser from (i) the distribution of the Convertible Debentures or (ii) making a distribution meeting the requirements of the exception set forth in Rule 102(c)(1)(i) of Regulation M.

 

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Section 4.03. Purchases of Common Stock by the Purchaser. Without the prior written consent of the Seller, the Purchaser shall not, and shall cause its affiliates and affiliated purchasers (each as defined in Rule 10b-18) not to, directly or indirectly (including, without limitation, by means of a derivative instrument) purchase, offer to purchase, place any bid or limit order that would effect a purchase of, or commence any tender offer relating to, any shares of Common Stock (or equivalent interest, including a unit of beneficial interest in a trust or limited partnership or a depository share) or any security convertible into or exchangeable for shares of Common Stock during the Contract Period; provided, however, that notwithstanding the foregoing, nothing in this Confirmation shall prohibit the Purchaser from making (i) any purchases specifically contemplated by the Employee Stock Option Tender Offer, (ii) any off-market privately negotiated purchases through J.P. Morgan Securities Inc., as its agent, on the Trade Date in connection with the initial offering of the Convertible Debentures and (iii) any purchases pursuant to the Rule 10b5-1 Repurchase Plan.

ARTICLE 5

REPRESENTATIONS, WARRANTIES AND AGREEMENTS

Section 5.01. Repeated Representations, Warranties and Agreements of the Purchaser. The Purchaser represents and warrants to, and agrees with, the Seller, on the date hereof and on any date on which the Purchaser elects to receive or make any delivery or payment pursuant to this Confirmation, that:

(a) Disclosure; Compliance with Laws. The reports and other documents filed by the Purchaser with the SEC pursuant to the Exchange Act when considered as a whole (with the more recent such reports and documents deemed to amend inconsistent statements contained in any earlier such reports and documents), do not contain any untrue statement of a material fact or any omission of a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances in which they were made, not misleading. The Purchaser is not in possession of any material nonpublic information regarding the Purchaser or the Common Stock.

(b) Rule 10b5-1. The Purchaser acknowledges that (i) the Purchaser does not have, and shall not attempt to exercise, any influence over how, when or whether to effect purchases of Common Stock by the Seller (or its agent or affiliate) in connection with this Confirmation and (ii) the Purchaser is entering into the Agreement and this Confirmation in good faith and not as part of a plan or scheme to evade compliance with federal securities laws including, without limitation, Rule 10b-5 promulgated under the Exchange Act. The Purchaser also acknowledges and agrees that any amendment, modification, waiver or termination of this Confirmation must be effected in accordance with the requirements for the amendment or termination of a “plan” as defined in Rule 10b5-1(c) under the Exchange Act. Without limiting the generality of the foregoing, any such amendment, modification, waiver or termination shall be made in good faith and not as part of a plan or scheme to evade the prohibitions of Rule 10b-5 under the Exchange Act, and no amendment, modification or waiver shall be made at any time at which the Purchaser or any officer or director of the Purchaser is aware of any material nonpublic information regarding the Purchaser or the Common Stock.

(c) No Manipulation. The Purchaser is not entering into this Confirmation to create actual or apparent trading activity in the Common Stock (or any security convertible into or exchangeable for Common Stock) or to manipulate the price of the Common Stock (or any security convertible into or exchangeable for Common Stock).

(d) Regulation M. The Purchaser is not engaged in a distribution, as such term is used in Regulation M, that would preclude purchases by the Purchaser or the Seller of the Common Stock or cause the Seller to violate any law, rule or regulation with respect to such purchases.

(e) Board Authorization. The Purchaser is entering into this Transaction in connection with its share repurchase program, which was approved by its board of directors and publicly disclosed, solely for the

 

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purposes stated in such board resolution and public disclosure. There is no internal policy of the Purchaser, whether written or oral, that would prohibit the Purchaser from entering into any aspect of this Transaction, including, but not limited to, the purchases of shares of Common Stock to be made pursuant hereto.

(f) Due Authorization and Good Standing. The Purchaser is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. This Confirmation has been duly authorized, executed and delivered by the Purchaser and (assuming due authorization, execution and delivery thereof by the Seller) constitutes a valid and legally binding obligation of the Purchaser. The Purchaser has all corporate power to enter into this Confirmation and to consummate the transactions contemplated hereby and to purchase the Common Stock and deliver any Alternative Termination Delivery Units in accordance with the terms hereof.

(g) Certain Transactions. There has not been any public announcement (as defined in Rule 165(f) under the Securities Act) of any merger, acquisition, or similar transaction involving a recapitalization relating to the Purchaser that would fall within the scope of Rule 10b-18(a)(13)(iv).

Section 5.02. Initial Representations, Warranties and Agreements of the Purchaser. The Purchaser represents and warrants to, and agrees with the Seller, as of the date hereof, that:

(a) Solvency. The assets of the Purchaser at their fair valuation exceed the liabilities of the Purchaser, including contingent liabilities; the capital of the Purchaser is adequate to conduct the business of the Purchaser and the Purchaser has the ability to pay its debts and obligations as such debts mature and does not intend to, or does not believe that it will, incur debt beyond its ability to pay as such debts mature.

(b) Required Filings. The Purchaser has made, and will use its best efforts to make, all filings required to be made by it with the SEC, any securities exchange or any other regulatory body with respect to the Transaction contemplated hereby.

(c) No Conflict. The execution and delivery by the Purchaser of, and the performance by the Purchaser of its obligations under, this Confirmation and the consummation of the transactions herein contemplated do not conflict with or violate (i) any provision of the certificate of incorporation, by-laws or other constitutive documents of the Purchaser, (ii) any statute or order, rule, regulation or judgment of any court or governmental agency or body having jurisdiction over the Purchaser or any of its subsidiaries or any of their respective assets or (iii) any contractual restriction binding on or affecting the Purchaser or any of its subsidiaries or any of its assets.

(d) Consents. All governmental and other consents that are required to have been obtained by the Purchaser with respect to performance, execution and delivery of this Confirmation have been obtained and are in full force and effect and all conditions of any such consents have been complied with.

(e) Investment Company Act. The Purchaser is not and, after giving effect to the transactions contemplated in this Confirmation, will not be required to register as an “investment company” as such term is defined in the Investment Company Act of 1940, as amended.

(f) Commodity Exchange Act. The Purchaser is an “eligible contract participant”, as such term is defined in Section 1a(12) of the Commodity Exchange Act, as amended.

(g) Employee Stock Option Tender Offer. The Employee Stock Option Tender Offer is a distribution meeting the requirements of the exception set forth in Rule 102(c)(1)(i) of Regulation M.

Section 5.03. Additional Representations, Warranties and Agreements. The Purchaser and the Seller represent and warrant to, and agree with, each other that:

(a) Agency. Each party agrees and acknowledges that (i) J.P. Morgan Securities Inc., an affiliate of the Seller (“JPMSI”), has acted solely as agent and not as principal with respect to this Transaction and (ii)

 

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JPMSI has no obligation or liability, by way of guaranty, endorsement or otherwise, in any manner in respect of this Transaction (including, if applicable, in respect of the settlement thereof). Each party agrees it will look solely to the other party (or any guarantor in respect thereof) for performance of such other party’s obligations under this Transaction. JPMSI is authorized to act as agent for the Seller.

(b) Non-Reliance. Each party has entered into this Transaction solely in reliance on its own judgment. Neither party has any fiduciary obligation to the other party relating to this Transaction. In addition, neither party has held itself out as advising, or has held out any of its employees or agents as having the authority to advise, the other party as to whether or not the other party should enter into this Transaction, any subsequent actions relating to this Transaction or any other matters relating to this Transaction. Neither party shall have any responsibility or liability whatsoever in respect of any advice of this nature given, or views expressed, by it or any such persons to the other party relating to this Transaction, whether or not such advice is given or such views are expressed at the request of the other party. The Purchaser has conducted its own analysis of the legal, accounting, tax and other implications of this Transaction and consulted such advisors, accountants and counsel as it has deemed necessary.

Section 5.04. Representations and Warranties of the Seller. The Seller represents and warrants to the Purchaser that:

(a) Due Authorization. This Confirmation has been duly authorized, executed and delivered by the Seller and (assuming due authorization, execution and delivery thereof by the Purchaser) constitutes a valid and legally binding obligation of the Seller. The Seller has all corporate power to enter into this Confirmation and to consummate the transactions contemplated hereby and to deliver the Common Stock in accordance with the terms hereof.

(b) Right to Transfer. The Seller will, at each date on which it is required to deliver shares of Common Stock to the Purchaser hereunder, have the free and unqualified right to transfer the Number of Shares of Common Stock to be delivered by the Seller pursuant to Sections 2.02 and 3.01 hereof, free and clear of any security interest, mortgage, pledge, lien, charge, claim, equity or encumbrance of any kind.

ARTICLE 6

ADDITIONAL COVENANTS

Section 6.01. Purchaser’s Further Assurances. The Purchaser hereby agrees with the Seller that the Purchaser shall cooperate with the Seller, and execute and deliver, or use its best efforts to cause to be executed and delivered, all such other instruments, and to obtain all consents, approvals or authorizations of any person, and take all such other actions as the Seller may reasonably request from time to time, consistent with the terms of this Confirmation, in order to effectuate the purposes of this Confirmation and the Transaction contemplated hereby.

Section 6.02 Purchaser’s Hedging Transactions. The Purchaser hereby agrees with the Seller that the Purchaser shall not, during the Contract Period, enter into or alter any corresponding or hedging transaction or position with respect to the Common Stock (including, without limitation, with respect to any securities convertible or exchangeable into the Common Stock) and agrees not to alter or deviate from the terms of this Confirmation.

Section 6.03. No Communications. The Purchaser hereby agrees with the Seller that the Purchaser shall not, directly or indirectly, communicate any information relating to the Common Stock or this Transaction (including any notices required by Section 6.04) to any employee of the Seller or J.P. Morgan Securities Inc., other than as set forth in the Communications Procedures attached as Annex A hereto.

Section 6.04. Notice of Certain Transactions. If at any time during the Contract Period, the Purchaser makes, or expects to be made, or has made, any public announcement (as defined in Rule 165(f) under the Securities Act) of any merger, acquisition, or similar transaction involving a recapitalization relating to the

 

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Purchaser (other than any such transaction in which the consideration consists solely of cash and there is no valuation period, or as to which the completion of such transaction or the completion of the vote by target shareholders has occurred), then the Purchaser shall (i) notify the Seller prior to the opening of trading in the Common Stock on any day on which the Purchaser makes, or expects to be made, or has made any such public announcement, (ii) notify the Seller promptly following any such announcement (or, if later, prior to the opening of trading in the Common Stock on the first day of any Seller Termination Share Purchase Period) that such announcement has been made and (iii) promptly deliver to the Seller following the making of any such announcement (or, if later, prior to the opening of trading in the Common Stock on the first day of any Seller Termination Share Payment Period) a certificate indicating (A) the Purchaser’s average daily Rule 10b-18 purchases (as defined in Rule 10b-18) during the three full calendar months preceding the date of such announcement and (B) the Purchaser’s block purchases (as defined in Rule 10b-18) effected pursuant to paragraph (b)(4) of Rule 10b-18 during the three full calendar months preceding the date of such announcement. In addition, the Purchaser shall promptly notify the Seller of the earlier to occur of the completion of such transaction and the completion of the vote by target shareholders. Accordingly, the Purchaser acknowledges that its actions in relation to any such announcement or transaction must comply with the standards set forth in Section 6.03.

Section 6.05 No Dividends. Purchaser shall not declare any dividend with an ex-dividend date scheduled to occur during the Contract Period.

ARTICLE 7

TERMINATION

Section 7.01. Additional Termination Events. (a) An Additional Termination Event shall occur in respect of which the Purchaser is the sole Affected Party and this Transaction is the sole Affected Transaction if, on any day, the Seller determines, in its sole reasonable judgment, that it is illegal to any material extent to establish, re-establish or maintain any hedging transactions reasonably necessary in the normal course of such party’s business of hedging the price and market risk of entering into and performing under this Transaction.

(b) An Additional Termination Event shall occur in respect of which the Purchaser is the sole Affected Party and this Transaction is the sole Affected Transaction if (i) a Share De-listing Event occurs; (ii) a Merger Event occurs; (iii) a Nationalization occurs or (iv) an event described in paragraph III of Annex A occurs.

(c) A “Share De-listing Event” means that at any time during the Contract Period, the Common Stock ceases to be listed, traded or publicly quoted on the Exchange for any reason (other than a Merger Event, a “De-Listing”) and is not immediately re-listed, traded or quoted as of the date of such de-listing, on another U.S. national securities exchange or a U.S. automated interdealer quotation system (a “Successor Exchange”), provided that it shall not constitute an Additional Termination Event if the Common Stock is immediately re-listed on a Successor Exchange upon its De-Listing from the Exchange, and the Successor Exchange shall be deemed to be the Exchange for all purposes. In addition, in such event, the Seller shall make any commercially reasonable adjustments it deems necessary to the terms of the Transaction.

(d) A “Merger Event” means the public announcement, including any public announcement as defined in Rule 165(f) of the Securities Act (by the Purchaser or otherwise) at any time during the Contract Period of any (i) planned recapitalization, reclassification or change of the Common Stock that will, if consummated, result in a transfer of more than 25% of the outstanding shares of Common Stock, (ii) planned consolidation, amalgamation, merger or similar transaction of the Purchaser with or into another entity (other than a consolidation, amalgamation or merger in which the Purchaser will be the continuing entity and which does not result in any such recapitalization, reclassification or change of more than 25% of such shares outstanding), (iii) other takeover offer for the shares of Common Stock that is aimed at resulting in a transfer of more than 25% of such shares of Common Stock (other than such shares owned or controlled by the offeror) or (iv) irrevocable commitment to any of the foregoing.

 

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(e) A “Nationalization” means that all or substantially all of the outstanding shares of Common Stock or assets of the Purchaser are nationalized, expropriated or are otherwise required to be transferred to any governmental agency, authority or entity.

Section 7.02. Consequences of Additional Termination Events. (a) In the event of the occurrence or effective designation of an Early Termination Date under the Agreement, cash settlement, as set forth in Section 7.02(b), shall apply unless (i) the Purchaser elects (which election shall be binding) in lieu of payment of the amount payable in respect of this Transaction pursuant to Section 6(d)(ii) of the Agreement (the “Termination Amount”), to deliver or to receive Alternative Termination Delivery Units pursuant to Section 7.03, and (ii) notifies the Seller of such election by delivery of written notice to the Seller on the Business Day immediately following the Purchaser’s receipt of a notice (as required by Section 6(d) of the Agreement following the designation of an Early Termination Date in respect of this Transaction) setting forth the amounts payable by the Seller or the Purchaser with respect to such Early Termination Date (the date of such delivery, the “Default Notice Day”) in which event (x) if the Termination Amount is owed to the Purchaser, the Seller shall be obligated to deliver to the Purchaser, or (y) if the Termination Amount is owed to the Seller, the Purchaser shall be obligated to deliver to the Seller, the Alternative Termination Delivery Units pursuant to Section 7.03; provided that the Purchaser’s election to deliver or receive the Alternative Termination Delivery Units pursuant to Section 7.03 shall not be valid and cash settlement shall apply if (i) the representations and warranties made by the Purchaser to the Seller in Section 5.01 are not true and correct as of the date the Seller makes such election, as if made on such date or (ii) in the event that the Termination Amount is payable by the Purchaser to the Seller, (A) the Purchaser has taken any action within its control that would make unavailable (x) the exemption set forth in Section 4(2) of the Securities Act, for the sale of any Alternative Termination Delivery Units by the Purchaser to the Seller or (y) an exemption from the registration requirements of the Securities Act reasonably acceptable to the Seller for resales of Alternative Termination Delivery Units by the Seller, (B) such Early Termination Date is in respect of an event which is within Purchaser’s control, or (C) the Purchaser fails to execute a private placement agreement providing for such resale, which agreement shall be in form and substance reasonably satisfactory to the Seller, or otherwise fails to comply with any commercially reasonable requirements imposed by the Seller in respect of the private placement of the Alternative Termination Delivery Units. For the avoidance of doubt, so long as Purchaser complies with the private placement conditions set forth in the preceding clauses (i) and (ii), Purchaser can satisfy its obligations hereunder by delivering to Seller Alternative Termination Delivery Units without registering them under the Securities Act.

(b) If cash settlement applies in respect of an Early Termination Date, Section 6 of the Agreement shall apply.

Section 7.03. Alternative Termination Settlement. Subject to Section 7.02(a), unless cash settlement is applicable pursuant to Section 7.02(b), (i) the Seller shall, beginning on the first Trading Day following the Default Notice Day and ending when the Seller shall have satisfied its obligations under this clause (the “Seller Termination Share Purchase Period”), purchase (subject to the provisions of Section 4.01 and Section 4.02 hereof) a number of Alternative Termination Delivery Units equal to (A) the Termination Amount divided by (B) the Termination Price; and (ii) the Seller shall deliver such Alternative Termination Delivery Units to the Purchaser on the settlement dates relating to such purchases; provided that if the Termination Amount is owed to the Seller, clauses (i) and (ii) of this Section 7.03 shall not apply and, in lieu thereof, the Purchaser shall, as soon as directed by the Seller after the Default Notice Day, deliver to the Seller a number of Alternative Termination Delivery Units equal to the quotient of (A) the Termination Amount divided by (B) the Termination Price; provided further that, in the event the Termination Amount is owed to the Seller, at any time prior to the time the Seller (or any affiliate of the Seller) has contracted to resell the Alternative Termination Delivery Units to be delivered, the Purchaser may deliver in lieu of such Alternative Termination Delivery Units an amount in cash equal to the Termination Amount in the manner set forth in Section 6(d) of the Agreement. Notwithstanding the foregoing, the Purchaser shall not be required to deliver shares of Common Stock or other securities comprising the aggregate Alternative Termination Delivery Units in excess of the Share Cap, in each case except to the extent that the Purchaser has available at such time authorized but unissued shares of such Common Stock or other securities not expressly reserved for any other uses (including, without limitation, shares of Common Stock reserved for issuance upon the exercise of options or convertible debt). The Purchaser shall not permit the sum of (i) the Share Cap plus (ii) the aggregate number of shares expressly reserved for any such other uses, in each case whether expressed as caps or as numbers of shares reserved or otherwise, to exceed at any time the number

 

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of authorized but unissued shares of Common Stock. For the avoidance of doubt, if the Termination Amount owed to Seller could result in delivery of the aggregate Alternative Termination Delivery Units in excess of the Share Cap, Purchaser shall not owe to Seller a cash obligation in respect of such excess.

Section 7.04. Notice of Default. If an Event of Default occurs in respect of the Purchaser, the Purchaser will, promptly upon becoming aware of it, notify the Seller specifying the nature of such Event of Default.

Section 7.05. Agreement in Respect of the Termination Amount. In determining any amounts payable in respect of the termination or cancellation of the Transaction pursuant to Section 6(e) of the Agreement or Article 7 hereof, the Calculation Agent shall make such determination solely on the basis of the Fair Value Variables. The Seller shall determine such amounts taking into account the amounts payable to Seller based on the make-whole table set forth in Exhibit B hereto.

Section 7.06. Special Provision for Payments by Purchaser. The parties hereby agree that, notwithstanding anything to the contrary herein or in the Agreement, in the event that an Early Termination Date (whether as a result of an Event of Default or a Termination Event) occurs or is designated with respect to the Transaction and, as a result, Purchaser owes to Seller an amount calculated under Section 6(e) of the Agreement or this Article 7 or any other amount in respect to the Transaction, such amount shall be calculated taking into account the amounts payable to Seller based on the make-whole table set forth in Exhibit B hereto. For the avoidance of doubt, other than in respect of an Early Termination Date that results in an amount payable to Seller that is calculated taking into account the amounts payable to Seller based on the make-whole table set forth in Exhibit B hereto, Purchaser will not owe any payment to Seller hereunder (except pursuant to Sections 2.02, 2.04 and 9.02).

ARTICLE 8

ADJUSTMENTS

Section 8.01. Cash Dividends. (a) If the Purchaser declares any Extraordinary Cash Dividend that has a record date during the Contract Period, then prior to or on the date on which such Extraordinary Cash Dividend is paid by the Purchaser to holders of record, the Purchaser shall pay to the Seller an amount in cash equal to the product of (i) the amount of such Extraordinary Cash Dividend and (ii) the theoretical short delta number of shares as of the opening of business on the related ex-dividend date, as determined by the Calculation Agent, required for the Seller to hedge its exposure to the Transaction.

(b) If the Purchaser declares any cash dividend on shares of Common Stock that is not an Extraordinary Cash Dividend (an “Ordinary Cash Dividend”) and that has a record date during the Contract Period, and the amount of such Ordinary Cash Dividend, together with all prior declared Ordinary Cash Dividends that have a record date during the same regular dividend period of the Purchaser, exceeds the amount set forth in the Pricing Supplement for such regular dividend period, the Calculation Agent shall make corresponding adjustments with respect to the Initial Purchase Price, the Downside Threshold, the Upside Threshold, the Minimum Delivery Number and the Maximum Delivery Number as the Calculation Agent determines appropriate to preserve the fair value of the Transaction to the Seller, and shall determine the effective date of such adjustment.

Section 8.02. Other Dilution Adjustments. If (x) any corporate event occurs involving the Purchaser or the Common Stock (other than an Extraordinary Cash Dividend or an Ordinary Cash Dividend but including, without limitation, a spin-off, a stock split, stock or other dividend or distribution, reorganization, rights offering or recapitalization) having a dilutive or concentrative effect on the Common Stock, or (y) as a result of the definition of Trading Day (whether because of a suspension of transactions pursuant to Section 4.02 or otherwise), any day that would otherwise be a Trading Day during the Contract Period is not a Trading Day or on such Trading Day, pursuant to Section 4.02, the Seller effects transactions with respect to shares of Common Stock at a volume lower than originally anticipated with respect to this Transaction, then, in any such case, the Calculation Agent shall make corresponding adjustments with respect to any one or more of the Downside

 

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***	Note: Confidential treatment has been requested with respect to the information contained within the [***] marking. Such portions have been omitted from this filing and have been filed separately with the Securities and Exchange Commission.

 

13

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Threshold, the Upside Threshold, the Minimum Delivery Number, the Maximum Delivery Number and any other variable or term relevant to the terms of the Transaction, as the Calculation Agent determines appropriate to preserve the fair value of the Transaction to the Seller, and shall determine the effective date of such adjustment (provided that in no event shall Purchaser be required to make any payment to Seller or to deliver any shares of Common Stock to Seller solely as a result of any adjustment pursuant to this Section 8.02 or Section 4.02). For purposes of this Section 8.02, the fair value of the Transaction to the Seller shall be determined solely on the basis of the Fair Value Variables.

Section 8.03 Agreement in Respect of Adjustments. In determining any adjustment in respect of the Transaction pursuant to Article 8 hereof, the Calculation Agent shall make such adjustments without regard to changes in expected dividends since the Trade Date.

Section 8.04 Agreement in Respect of Dividends. For the avoidance of doubt, if an Early Termination Date occurs in respect of the Transaction as a result of an Additional Termination Event of the type described in Article 7, the Termination Amount shall be determined without regard to the difference between the Extraordinary Dividend or any dividend, including the excess amount as described in Section 8.01(b), giving rise to such Additional Termination Event and the expected dividend as of the Trade Date. Notwithstanding the foregoing, this Section 8.04 shall not be construed as limiting any damages that may be payable as a result of a breach of this Confirmation, including, without limitation, Section 6.05 hereof.

ARTICLE 9

MISCELLANEOUS

Section 9.01. Successors and Assigns. All covenants and agreements in this Confirmation made by or on behalf of either of the parties hereto shall bind and inure to the benefit of the respective successors and assigns of the parties hereto whether so expressed or not.

Section 9.02. Purchaser Indemnification. The Purchaser (the “Indemnifying Party”) agrees to indemnify and hold harmless the Seller and its officers, directors, employees, affiliates, advisors, agents and controlling persons (each, an “Indemnified Person”) from and against any and all losses, claims, damages and liabilities, joint or several (collectively, “Obligations”), to which an Indemnified Person may become subject arising out of or in connection with this Confirmation or any claim, litigation, investigation or proceeding relating thereto, regardless of whether any of such Indemnified Person is a party thereto, and to reimburse, within 30 days, upon written request, each such Indemnified Person for any reasonable out-of-pocket legal or other expenses incurred in connection with investigating, preparation for, providing evidence for or defending any of the foregoing, provided, however, that the Indemnifying Party shall not have any liability to any Indemnified Person to the extent that such Obligations (i) are finally determined by a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct of, or a breach of this Agreement or a violation of law by such Indemnified Person that is not related to a violation of law by the Indemnifying Party (and in such case, such Indemnified Person shall promptly return to the Indemnifying Party any amounts previously expended by the Indemnifying Party hereunder) or (ii) are trading losses incurred by the Seller as part of its purchases or sales of shares of Common Stock pursuant to this Confirmation or costs or losses incurred in hedging transactions in connection with this Agreement (unless (and to the extent) such losses or costs are incurred as a result of a breach by the Purchaser of any agreement, term or covenant herein).

Section 9.03. Assignment and Transfer. Notwithstanding the Agreement, the Seller may assign any of its rights or duties hereunder to any one or more of its affiliates without the prior written consent of the Purchaser. Notwithstanding any other provision in this Confirmation to the contrary requiring or allowing Seller to purchase, sell, receive or deliver any shares of Common Stock or other securities to or from the Purchaser, Seller may designate any of its affiliates to purchase, sell, receive or deliver such shares of Common Stock or other securities and otherwise to perform the Seller’s obligations in respect of this Transaction and any such designee may assume such obligations. The Seller shall be discharged of its obligations to the Purchaser only to

 

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***	Note: Confidential treatment has been requested with respect to the information contained within the [***] marking. Such portions have been omitted from this filing and have been filed separately with the Securities and Exchange Commission.

 

14

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the extent of any such performance. For the avoidance of doubt, Seller hereby acknowledges that notwithstanding any such designation hereunder, to the extent any of Seller’s obligations in respect of this Transaction are not completed by its designee, Seller shall be obligated to continue to perform or to cause any other of its designees to perform in respect of such obligations.

Section 9.04. Calculation Agent. Whenever the Calculation Agent is required to act or to exercise judgment in any way with respect to this Transaction, it will do so in good faith and in a commercially reasonable manner.

Section 9.05. Non-confidentiality. The Seller and the Purchaser hereby acknowledge and agree that subject to Section 6.03 each is authorized to disclose every aspect of this Confirmation and the transactions contemplated hereby to any and all persons, without limitation of any kind, and there are no express or implied agreements, arrangements or understandings to the contrary.

Section 9.06. Unenforceability and Invalidity. To the extent permitted by law, the unenforceability or invalidity of any provision or provisions of this Confirmation shall not render any other provision or provisions herein contained unenforceable or invalid.

Section 9.07. Securities Contract. The parties hereto agree and acknowledge as of the date hereof that (i) the Seller is a “financial institution” within the meaning of Section 101(22) of Title 11 of the United States Code (the “Bankruptcy Code”) and (ii) this Confirmation is a “securities contract,” as such term is defined in Section 741(7) of the Bankruptcy Code, entitled to the protection of Sections 362(b)(6) and 555 of the Bankruptcy Code.

Section 9.08. No Collateral, Netting or Setoff. Notwithstanding any provision of the Agreement, or any other agreement between the parties, to the contrary, the obligations of the Purchaser hereunder are not secured by any collateral. Obligations under this Transaction shall not be netted, recouped or set off (including pursuant to Section 6 of the Agreement) against any other obligations of the parties, whether arising under the Agreement, this Confirmation, under any other agreement between the parties hereto, by operation of law or otherwise, and no other obligations of the parties shall be netted, recouped or set off (including pursuant to Section 6 of the Agreement) against obligations under this Transaction, whether arising under the Agreement, this Confirmation, under any other agreement between the parties hereto, by operation of law or otherwise, and each party hereby waives any such right of setoff, netting or recoupment.

Section 9.09 Equity Rights. Seller acknowledges and agrees that this Agreement is not intended to convey to it rights with respect to this Transaction that are senior to the claims of common stockholders in the event of the Purchaser’s bankruptcy.

Section 9.10 Notices. Unless otherwise specified herein, any notice, the delivery of which is expressly provided for in this Confirmation, may be made by telephone, to be confirmed in writing to the address below. Changes to the information below must be made in writing.

 

(a)

If to the Purchaser:

VeriSign, Inc.

487 East Middlefield Road

Mountain View, CA 94043

Attention: General Counsel

Telephone No: 703-948-4551

Facsimile No: 703-450-7326

 

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***	Note: Confidential treatment has been requested with respect to the information contained within the [***] marking. Such portions have been omitted from this filing and have been filed separately with the Securities and Exchange Commission.

 

15

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with a copy to:

VeriSign, Inc.

487 East Middlefield Road

Mountain View, CA 94043

Attention: David Goddard

Telephone No: 650-426-5408

Facsimile No: 650-426-3169

 

(b)

If to the Seller:

JPMorgan Chase Bank, National Association

c/o J.P. Morgan Securities Inc.

277 Park Avenue

New York, NY 10172

Attention: Eric Stefanik

Title: Operations Analyst

EDG Corporate Marketing

Telephone No: (212) 622-5814

Facsimile No: (212) 622-8534

 

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***	Note: Confidential treatment has been requested with respect to the information contained within the [***] marking. Such portions have been omitted from this filing and have been filed separately with the Securities and Exchange Commission.

 

16

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Please confirm that the foregoing correctly sets forth the terms of our agreement by executing the copy of this Confirmation enclosed for that purpose and returning it to us.

 

Confirmed as of the date first above written:

VERISIGN, INC.

 

By:
Name:
Title:

JPMorgan Chase Bank, National Association

Organised under the laws of the United States as a National Banking Association.

Main Office 1111 Polaris Parkway, Columbus, Ohio 43271

Registered as a branch in England & Wales branch No. BR000746.

Registered Branch Office 125 London Wall, London EC2Y 5AJ

Authorised and regulated by the Financial Services Authority

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ANNEX A

COMMUNICATIONS PROCEDURES

August 14, 2007

I. Introduction

VeriSign, Inc., a Delaware corporation (“Counterparty”) and J.P. Morgan Securities Inc., as agent for JPMorgan Chase Bank, National Association, London Branch (“JPMorgan”) have adopted these communications procedures (the “Communications Procedures”) in connection with entering into the Confirmation (the “Confirmation”) dated as of August 14, 2007 between JPMorgan and Counterparty relating to the sale by JPMorgan to Counterparty of common stock, par value $0.001 per share, or security entitlements in respect thereof (the “Common Stock”) of the Counterparty. These Communications Procedures supplement, form part of, and are subject to the Confirmation.

II. Communications Rules

1. From the date hereof until the end of the Contract Period, Counterparty and its Employees and Designees shall not engage in any Program-Related Communication with, or disclose any Material Non-Public Information to, any EDG Trading Personnel. Except as set forth in the preceding sentence, the Confirmation shall not limit Counterparty and its Employees and Designees in their communication with Affiliates and Employees of JPMorgan, including without limitation Employees who are EDG Permitted Contacts.

III. Termination

If, in the sole judgment of any EDG Trading Personnel or any affiliate or Employee of JPMorgan participating in any Communication with Counterparty or any Employee or Designee of Counterparty, such Communication would not be permitted by these Communications Procedures, such EDG Trading Personnel or affiliate or Employee of JPMorgan shall immediately terminate such Communication. In such case, or if such EDG Trading Personnel or affiliate or Employee of JPMorgan determines following completion of any Communication with Counterparty or any Employee or Designee of Counterparty that such Communication was not permitted by these Communications Procedures, such EDG Trading Personnel or such affiliate or Employee of JPMorgan shall promptly consult with his or her supervisors and with counsel for JPMorgan regarding such Communication. If, in the reasonable judgment of JPMorgan’s counsel following such consultation, there is more than an insignificant risk that such Communication could materially jeopardize the availability of the affirmative defenses provided in Rule 10b5-1 under the 1934 Act with respect to any ongoing or contemplated activities of JPMorgan or its affiliates in respect of the Confirmation, it shall be an Additional Termination Event with respect to the Confirmation.

IV. Definitions

Capitalized terms used and not otherwise defined herein shall have the meanings ascribed to them in the Confirmation. As used herein, the following words and phrases shall have the following meanings:

“Communication” means any contact or communication (whether written, electronic, oral or otherwise) between Counterparty or any of its Employees or Designees, on the one hand, and JPMorgan or any of its affiliates or Employees, on the other hand.

 

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***	Note: Confidential treatment has been requested with respect to the information contained within the [***] marking. Such portions have been omitted from this filing and have been filed separately with the Securities and Exchange Commission.

 

A-1

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“Designee” means a person designated, in writing or orally, by Counterparty to communicate with JPMorgan on behalf of Counterparty.

“EDG Permitted Contact” means any of Mr. David Aidelson, Ms. Bernadette Barnard, Mr. Gregory Batista, Mr. Elliot Chalom, Mr. Santosh Nabar, Mr. James Rothschild, Mr. Jason M. Wood and Mr. Jeff J. Zajkowski or any of their designees; provided that JPMorgan may amend the list of EDG Permitted Contacts by delivering a revised list of EDG Permitted Contacts to Counterparty.

“EDG Trading Personnel” means Reuben Jacob, Gaurav Arora and any other Employee of the public side of the Equity Derivatives Group or the Special Equities Group of J.P. Morgan Chase & Co.; provided that JPMorgan may amend the list of EDG Trading Personnel by delivering a revised list of EDG Trading Personnel to Counterparty; and provided further that, for the avoidance of doubt, the persons listed as EDG/SEG Permitted Contacts are not EDG/SEG Trading Personnel.

“Employee” means, with respect to any entity, any owner, principal, officer, director, employee or other agent or representative of such entity, and any affiliate of any of such owner, principal, officer, director, employee, agent or representative.

“Material Non-Public Information” means information relating to the Counterparty or the Common Stock that (a) has not been widely disseminated by wire service, in one or more newspapers of general circulation, by communication from the Counterparty to its shareholders or in a press release, or contained in a public filing made by the Counterparty with the Securities and Exchange Commission and (b) a reasonable investor might consider to be of importance in making an investment decision to buy, sell or hold shares of Common Stock. For the avoidance of doubt and solely by way of illustration, information should be presumed “material” if it relates to such matters as dividend increases or decreases, earnings estimates, changes in previously released earnings estimates, significant expansion or curtailment of operations, a significant increase or decline of orders, significant merger or acquisition proposals or agreements, significant new products or discoveries, extraordinary borrowing, major litigation, liquidity problems, extraordinary management developments, purchase or sale of substantial assets and similar matters.

“Program-Related Communication” means any Communication the subject matter of which relates to the Confirmation or any Transaction under the Confirmation or any activities of JPMorgan (or any of its affiliates) in respect of the Confirmation or any Transaction under the Confirmation.

 

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***	Note: Confidential treatment has been requested with respect to the information contained within the [***] marking. Such portions have been omitted from this filing and have been filed separately with the Securities and Exchange Commission.

 

A-2

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ANNEX B

PRICING SUPPLEMENT

This Pricing Supplement is subject to the Confirmation dated as of August 14, 2007 (the “Confirmation”) between J.P. Morgan Securities Inc., as agent for JPMorgan Chase Bank, National Association, London Branch (the “Seller”), and VeriSign, Inc., a Delaware corporation (the “Purchaser”). Capitalized terms used herein have the meanings set forth in the Confirmation.

 

1		Discount:		$[***]
2		Initial Number of Shares:		[***] shares of Common Stock
3		Downside Threshold:		$[***]per share of Common Stock
4		Upside Threshold:		$[***] per share of Common Stock
5		Valuation Completion Date:		The Trading Day, during the period commencing on and including the [***]th Trading Day following September 28, 2007 and ending on and including the Expiration Date, specified as such by the Seller, in its sole judgment, by delivering a notice designating such Trading Day as a Valuation Completion Date by the close of business on the Business Day immediately following such Trading Day; provided that if the Seller fails to validly designate the Valuation Completion Date prior to the Expiration Date, the Valuation Completion Date shall be the Expiration Date.
6		Ordinary Cash Dividend:

 

Ordinary Cash Dividend		Dividend Period
$0.00 per share of Common Stock		Any period after August 14, 2007

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***	Note: Confidential treatment has been requested with respect to the information contained within the [***] marking. Such portions have been omitted from this filing and have been filed separately with the Securities and Exchange Commission.

 

A-1

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EXHIBIT A

[Letterhead of Purchaser]

JPMorgan Chase Bank, National Association

c/o J.P. Morgan Securities Inc.

277 Park Avenue

11^th Floor

New York, New York 10172

 

Re:

Accelerated Purchase of Equity Securities

Ladies and Gentlemen:

In connection with our entry into the Confirmation dated as of August 14, 2007 (the “Confirmation”), we hereby represent that set forth below is the total number of shares of our common stock purchased by or for us or any of our affiliated purchasers in Rule 10b-18 purchases of blocks (all defined in Rule 10b-18 under the Securities Exchange Act of 1934) pursuant to the once-a-week block exception set forth in Rule 10b-18(b)(4) during the four full calendar weeks immediately preceding the first day of the Seller Termination Share Purchase Period (as defined in the Confirmation) and the week during which the first day of the Seller Termination Share Purchase Period occurs.

Number of Shares:                     

We understand that you will use this information in calculating trading volume for purposes of Rule 10b-18.

 

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***	Note: Confidential treatment has been requested with respect to the information contained within the [***] marking. Such portions have been omitted from this filing and have been filed separately with the Securities and Exchange Commission.

 

Exh-A-1

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EXHIBIT B

In the event that an Early Termination Date (whether as a result of an Event of Default or a Termination Event) occurs or is designated with respect to the Transaction, the Seller shall determine the Termination Amount by taking the difference between (a) the amount, if any, payable by Seller to Purchaser, determined solely on the basis of the Fair Value Variables and (b) the amount payable by Purchaser to Seller determined in accordance with the make-whole tables set forth below (the “Make-Whole Amount”). The Make-Whole Amount will be determined by Seller by multiplying (i) the Purchase Price divided by $[***] and (ii) an amount in U.S. Dollars set forth on the relevant make-whole table below, based on (x) the Early Termination Date (set forth in the first row of each grid under the heading “Time”), (y) the price of one share of Common Stock prior to the event resulting in the Early Termination Date, as determined by the Calculation Agent in its sole reasonable judgment (set forth in the third row of each grid under the heading “Stock before”), and (z) the percentage increase in the price of one share of Common Stock following the event resulting in the Early Termination Date, as determined by the Calculation Agent in its sole reasonable judgment (set forth in the first column of each grid under the heading “Stock after”).

The exact stock prices, before and after the relevant event, and the exact Early Termination Date may not be set forth in the tables below, in which case:

 

1.

If the Early Termination Date is between two dates set forth on the tables below, the Calculation Agent will determine two relevant amounts by reference to the two tables below listing the date immediately preceding the Early Termination Date and the date immediately following the Early Termination Date. Such amounts will each be determined as follows:

 

a.

(i) if the “Stock before” price is between two “Stock before” amounts listed on the tables, the relevant amount will be determined by a straight-line interpolation between the amounts set forth for the higher and lower stock price amounts, and (ii) if the “Stock before” price is less than the lowest “Stock before” amount listed on the tables, then the lowest “Stock before” amount listed on the table will be used for the purposes of the calculation, and (iii) if the “Stock before” price is greater than the highest “Stock before” amount listed on the tables, then the highest “Stock before” amount listed on the table will be used for the purposes of the calculation; and

 

b.

(i) if the “Stock after” price is between two “Stock after” amounts listed on the tables, the relevant amount will be determined by a straight-line interpolation between the amounts set forth for the higher and lower stock price amounts, and (ii) if the “Stock after” price is less than the lowest “Stock after” amount listed on the tables (for the avoidance of doubt, less than 100% of the “Stock before” price), then the lowest “Stock after” amount listed on the table will be used for the purposes of the calculation, and (iii) if the “Stock after” price is greater than the highest “Stock after” amount listed on the tables, then the highest “Stock after” amount listed on the table will be used for the purposes of the calculation.

 

2.

If the Early Termination Date is between two dates set forth on the tables below, the Make-Whole Amount will be determined by a straight-line interpolation between the two dates of the amounts determined pursuant to (a) and (b) above. If the Early Terminate Date is on a date set forth on one of the tables below, the Make-Whole Amount will be the amount determined pursuant to (a) and (b) above.

 

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***	Note: Confidential treatment has been requested with respect to the information contained within the [***] marking. Such portions have been omitted from this filing and have been filed separately with the Securities and Exchange Commission.

 

Exh-B-1

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For the avoidance of doubt, upon the occurrence of an event permitting the Calculation Agent to make adjustments to the terms of the Transaction in accordance with Section 4.02 or 8.02 of the Confirmation, the Calculation Agent shall adjust any variable or term of the make-whole tables set forth below to preserve the economic intent of the parties as of the Trade Date.

Time: 0

 

FINAL GRID

80%

85%

90%

95%

100%

105%

110%

115%

120%

Stock before

22.91

24.34

25.78

27.21

28.64

30.07

31.50

32.94

34.37

Stock after (% of stock before)

100%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

105%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

110%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

115%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

120%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

125%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

130%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

135%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

140%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

145%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

150%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

160%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

170%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

180%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

190%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

Time: start of Averaging Period

FINAL GRID

80%

85%

90%

95%

100%

105%

110%

115%

120%

Stock before

22.91

24.34

25.78

27.21

28.64

30.07

31.50

32.94

34.37

Stock after (% of stock before)

100%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

105%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

110%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

115%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

120%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

125%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

130%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

135%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

140%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

145%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

150%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

160%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

170%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

180%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

190%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

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***	Note: Confidential treatment has been requested with respect to the information contained within the [***] marking. Such portions have been omitted from this filing and have been filed separately with the Securities and Exchange Commission.

 

Exh-B-2

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Time: start of Averaging Period + 1 month

FINAL GRID

80%

85%

90%

95%

100%

105%

110%

115%

120%

Stock before

22.91

24.34

25.78

27.21

28.64

30.07

31.50

32.94

34.37

Stock after (% of stock before)

100%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

105%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

110%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

115%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

120%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

125%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

130%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

135%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

140%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

145%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

150%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

160%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

170%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

180%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

190%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

Time: start of Averaging Period + 2 months

FINAL GRID

80%

85%

90%

95%

100%

105%

110%

115%

120%

Stock before

22.91

24.34

25.78

27.21

28.64

30.07

31.50

32.94

34.37

Stock after (% of stock before)

100%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

105%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

110%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

115%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

120%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

125%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

130%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

135%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

140%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

145%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

150%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

160%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

170%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

180%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

190%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

---

***	Note: Confidential treatment has been requested with respect to the information contained within the [***] marking. Such portions have been omitted from this filing and have been filed separately with the Securities and Exchange Commission.

 

Exh-B-3

---

Time: start of Averaging Period + 3 months

FINAL GRID

80%

85%

90%

95%

100%

105%

110%

115%

120%

Stock before

22.91

24.34

25.78

27.21

28.64

30.07

31.50

32.94

34.37

Stock after (% of stock before)

100%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

105%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

110%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

115%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

120%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

125%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

130%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

135%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

140%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

145%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

150%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

160%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

170%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

180%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

190%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

Time: start of Averaging Period + 4 months

FINAL GRID

80%

85%

90%

95%

100%

105%

110%

115%

120%

Stock before

22.91

24.34

25.78

27.21

28.64

30.07

31.50

32.94

34.37

Stock after (% of stock before)

100%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

105%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

110%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

115%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

120%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

125%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

130%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

135%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

140%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

145%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

150%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

160%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

170%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

180%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

190%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

---

***	Note: Confidential treatment has been requested with respect to the information contained within the [***] marking. Such portions have been omitted from this filing and have been filed separately with the Securities and Exchange Commission.

 

Exh-B-4

---

Time: start of Averaging Period + 5 months

FINAL GRID

80%

85%

90%

95%

100%

105%

110%

115%

120%

Stock before

22.91

24.34

25.78

27.21

28.64

30.07

31.50

32.94

34.37

Stock after (% of stock before)

100%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

105%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

110%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

115%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

120%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

125%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

130%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

135%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

140%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

145%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

150%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

160%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

170%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

180%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

190%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

Time: start of Averaging Period + 6 months

FINAL GRID

80%

85%

90%

95%

100%

105%

110%

115%

120%

Stock before

22.91

24.34

25.78

27.21

28.64

30.07

31.50

32.94

34.37

Stock after (% of stock before)

100%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

105%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

110%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

115%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

120%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

125%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

130%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

135%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

140%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

145%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

150%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

160%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

170%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

180%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

190%

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

---

***	Note: Confidential treatment has been requested with respect to the information contained within the [***] marking. Such portions have been omitted from this filing and have been filed separately with the Securities and Exchange Commission.

 

Exh-B-5

EXHIBIT 12.01

Ratio Of Earnings To Fixed Charges

 

						Year ended
(In Thousands)		June 30, 2007				December 31, 2006				December 31, 2005				December 31, 2004				December 31, 2003				December 31, 2002
Fixed Charges
Interest Expensed		$	2,582				7,838			$	—			$	—			$	—			$	—
Interest Capitalized			—				—				—				—				—				—
Amortized Premiums			—				—				—				—				—				—
Amortized Discounts			—				—				—				—				—				—
Amortized of Fair Value of Derivative at Inception			—				—				—				—				—				—
Capitalized Expenses related to Indebtedness			—				—				—				—				—				—
Estimate of Interest within Rental Expense			1,293				2,482				1,760				1,386				2,006				1,853
Preference security dividend			—				—				—				—				—				—
Total Fixed Charges		$	3,875			$	10,320			$	1,760			$	1,386			$	2,006			$	1,853
Earnings
+ Pretax Income from Continuing Operations		$	54,731			$	133,082			$	263,317			$	154,170			$	(275,786	)		$	(4,998,771	)
+ Fixed Charges			3,875				10,320				1,760				1,386				2,006				1,853
+ Amortization of Capitalized Interest			—				—				—				—				—				—
+ Distributed Income of Equity Investee			2,196				—				—				—				—				—
+ Pretax losses of Equity Investee			—				—				—				—				—				—
- Interest Capitalized			—				—				—				—				—				—
- Preference Securities Dividend of Consolidated Subsidiaries			—				—				—				—				—				—
- Minority Interest in Pretax income of Subsidiaries			(487	)			(2,618	)			(4,702	)			(2,875	)			(474	)			(415	)
Total Earnings		$	61,289			$	146,020			$	269,779			$	158,431			$	(273,306	)		$	(4,986,503	)
Earnings to Fixed Charges Ratio			15.8				14.1				153.3				114.3				(136.2	)			(2,691.0	)

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

The Board of Directors

VeriSign, Inc.:

We consent to the use of our report dated July 12, 2007, except for notes 2 and 4 which are as of November 2, 2007, with respect to the consolidated balance sheets of VeriSign, Inc. and subsidiaries (the Company) as of December 31, 2006 and 2005, and the related consolidated statements of income, stockholders’ equity, comprehensive income, and cash flows for each of the years in the three-year period ended December 31, 2006, which report appears on Form 8-K of VeriSign, Inc. dated November 2, 2007, and of our report dated July 12, 2007 with respect to management’s assessment of the effectiveness of internal control over financial reporting as of December 31, 2006, and the effectiveness of internal control over financial reporting as of December 31, 2006, which report appears in the December 31, 2006 annual report on Form 10-K of VeriSign, Inc., incorporated herein by reference and to the reference to our firm under the heading “Experts” in the prospectus.

Our report dated July 12, 2007, except for notes 2 and 4 which are as of November 2, 2007, contains an explanatory note that refers to the Company’s adoption of Statement of Financial Accounting Standards No. 123 (revised 2004), Share-Based Payment, effective January 1, 2006.

Our report dated July 12, 2007, on management’s assessment of the effectiveness of internal control over financial reporting and the effectiveness of internal control over financial reporting as of December 31, 2006, expresses our opinion that VeriSign, Inc. did not maintain effective internal control over financial reporting as of December 31, 2006, because of the effect of a material weakness related to the Company’s stock administration policies and practices and contains an explanatory paragraph that states that the material weakness was comprised of the following control deficiencies: (1) failure to consistently implement and apply policies and procedures related to the approval of equity-based grants to executive officers, retention grants and grants made in connection with new hires, promotions, and annual performance reviews; (2) lack of complete and timely reconciliation of grants and cancellations from the Company’s stock administration database to its financial reporting systems; lack of consistent reconciliation of grant dates in the system of record to supporting documentation; (3) inadequate supervision and training of personnel involved with the equity-based grant processes; and (4) lack of effective coordination and communication among the Human Resources Department, Accounting Department and Legal Department in connection with the administration of equity-based grants. The control deficiencies resulted in more than a remote likelihood that a material misstatement of the Company’s annual or interim financial statements would not be prevented or detected. A material weakness comprised of similar control deficiencies to those noted above resulted in material errors to, and the restatement of, the 2005 and 2004 annual consolidated financial statements and the condensed consolidated financial statements for the interim periods in 2005 and for the interim period ended March 31, 2006.

Our report on management’s assessment of the effectiveness of internal control over financial reporting and the effectiveness of internal control over financial reporting as of December 31, 2006, contains an explanatory paragraph that states the Company acquired m-Qube, Inc. (m-Qube) and inCode Telecom Group, Inc. (inCode) on May 1, 2006 and November 30, 2006, respectively, and management excluded from its assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2006 m-Qube and inCode’s internal control over financial reporting associated with total assets of $316,131,000 and $89,656,000, respectively, and total revenues of $26,985,000 and $5,000,000, respectively, included in the consolidated financial statements of VeriSign, Inc. and subsidiaries as of and for the year ended December 31, 2006. Our audit of internal control over financial reporting of VeriSign, Inc. also excluded an evaluation of the internal control over financial reporting of m-Qube and inCode.

/s/ KPMG LLP

Mountain View, California

November 2, 2007

EXHIBIT 25.01

 

---

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

---

FORM T-1

STATEMENT OF ELIGIBILITY UNDER

THE TRUST INDENTURE ACT OF 1939 OF A

CORPORATION DESIGNATED TO ACT AS TRUSTEE

Check if an Application to Determine Eligibility of

a Trustee Pursuant to Section 305(b)(2)

 

---

U.S. BANK NATIONAL ASSOCIATION

(Exact name of Trustee as specified in its charter)

31-0841368

I.R.S. Employer Identification No.

 

800 Nicollet Mall Minneapolis, Minnesota		55402
(Address of principal executive offices)		(Zip Code)

Paula Oswald

U.S. Bank National Association

633 W. 5^TH Street, 24^th Floor

Los Angeles, CA 90071

(213) 615-6043

(Name, address and telephone number of agent for service)

VeriSign, Inc.

(Exact name of obligor as specified in its charter)

 

Delaware		94-3221585
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

 

487 E. Middlefield Road, Mountain View, CA		94043
(Address of Principal Executive Offices)		(Zip Code)

3.25% Junior Subordinated Convertible Debentures due 2037

(Title of the Indenture Securities)

 

---

---

FORM T-1

Item 1. GENERAL INFORMATION. Furnish the following information as to the Trustee.

 

a)

Name and address of each examining or supervising authority to which it is subject.

Comptroller of the Currency

Washington, D.C.

 

b)

Whether it is authorized to exercise corporate trust powers.

Trustee is authorized to exercise corporate trust powers.

Item 2. AFFILIATIONS WITH OBLIGOR. If the obligor is an affiliate of the Trustee, describe each such affiliation.

None

In answering this item, the trustee has relied, in part, upon information furnished by the obligor and the underwriters, and has also examined its own books and records for the purpose of answering this item.

Items 3-15 Items 3-15 are not applicable because to the best of the Trustee’s knowledge, the obligor is not in default under any Indenture for which the Trustee acts as Trustee.

Item 16. LIST OF EXHIBITS: List below all exhibits filed as a part of this statement of eligibility and qualification.

 

1.

A copy of the Articles of Association of the Trustee.*

 

2.

A copy of the certificate of authority of the Trustee to commence business.*

 

3.

A copy of the certificate of authority of the Trustee to exercise corporate trust powers.*

 

4.

A copy of the existing bylaws of the Trustee.**

 

5.

A copy of each Indenture referred to in Item 4. Not applicable.

 

6.

The consent of the Trustee required by Section 321(b) of the Trust Indenture Act of 1939, attached hereto as Exhibit 6.

 

7.

A copy of the latest report of condition of the trustee published pursuant to law or the requirements of its supervising or examining authority is annexed hereto as Exhibit 7 and made a part hereof.

---

*	Incorporated by reference to Registration Number 333-128217.

Copies of the Articles of Association of the trustee, as now in effect, a certificate of authority to commence business and a certificate of authority to exercise corporate trust powers are on file with the Securities and Exchange Commission as Exhibits with corresponding exhibit numbers to the Form T-1 of Revlon Consumer Products Corporation, filed pursuant to Section 305(b)(2) of the Trust Indenture Act of 1939, as amended, on November 15, 2005 (Registration No. 333-128217), and are incorporated herein by reference.

**	Incorporated by reference to Registration Number 333-1145601.

Copies of the existing bylaws of the Trustee, amended June 6, 2007, are on file with the Securities and Exchange Commission as Exhibits with corresponding exhibit numbers to the Form T-1 of iPCS, INC. filed pursuant to Section 305(b)(2) of the Trust Indenture Act of 1939, as amended, on August 21, 2007, and are incorporated herein by reference.

---

NOTE

The answers to this statement insofar as such answers relate to what persons have been underwriters for any securities of the obligors within three years prior to the date of filing this statement, or what persons are owners of 10% or more of the voting securities of the obligors, or affiliates, are based upon information furnished to the Trustee by the obligors.

SIGNATURE

Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the Trustee, U.S. BANK NATIONAL ASSOCIATION, a national banking association organized and existing under the laws of the United States of America, has duly caused this statement of eligibility and qualification to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Los Angeles, State of California on the 10th of October, 2007.

 

 

2

---

Exhibit 6

CONSENT

In accordance with Section 321(b) of the Trust Indenture Act of 1939, the undersigned, U.S. BANK NATIONAL ASSOCIATION hereby consents that reports of examination of the undersigned by Federal, State, Territorial or District authorities may be furnished by such authorities to the Securities and Exchange Commission upon its request therefor.

Dated: October 10, 2007

 

 

3

---

Exhibit 7

U.S. Bank National Association

Statement of Financial Condition

As of 06/30/2007

 

		($000’s) 06/30/2007
Assets
Cash and Due From Depository Institutions		$	6,570,622
Federal Reserve Stock			0
Securities			38,972,163
Federal Funds			3,771,433
Loans & Lease Financing Receivables			144,255,624
Fixed Assets			1,910,922
Intangible Assets			12,181,700
Other Assets			13,363,411
Total Assets		$	221,025,875
Liabilities
Deposits		$	133,727,871
Fed Funds			4,419,451
Treasury Demand Notes			7,330,993
Trading Liabilities			241,301
Other Borrowed Money			38,213,977
Acceptances			0
Subordinated Notes and Debentures			7,697,466
Other Liabilities			7,434,860
Total Liabilities		$	199,065,919
Equity
Minority Interest in Subsidiaries		$	1,537,943
Common and Preferred Stock			18,200
Surplus			12,057,531
Undivided Profits			8,346,282
Total Equity Capital		$	21,959,956
Total Liabilities and Equity Capital		$	221,025,875

 

4